Oral Answers to Questions

INTERNATIONAL DEVELOPMENT

The Secretary of State was asked—

Palestine

Alistair Carmichael: What support his Department has provided to Palestinian communities affected by recent airstrikes.

Douglas Alexander: The recent air strikes and incursions have exacerbated an already grave humanitarian situation: 80 per cent. of the population is at least partly dependent on food aid and 90 per cent. of mains water is polluted. I have allocated an additional £2 million to the International Committee of the Red Cross, which provides water, sanitation, food, medicines and shelter. That is in addition to our wider contribution—linked to political progress—of £243 million over three years.

Alistair Carmichael: The Secretary of State is doubtless aware that the UN Office for the Co-ordination of Humanitarian Affairs report on the situation in Gaza during the week from 27 February to 3 March recorded that, in that week alone, 107 Palestinians were killed and 250 injured by the Israel Defence Forces and that two IDF soldiers and one Israeli citizen were killed and 25 injured. It also outlines a growing humanitarian crisis in Gaza, with some 30 per cent. of the population currently without access to a regular water supply. Does the Secretary of State agree that there is a prima facie case of Israel being in breach of its obligations under article 33 of the Geneva convention regarding collective punishment? If he does agree, what action will the Government—

Mr. Speaker: Order.

Douglas Alexander: Of course we unreservedly condemn the rocket attacks that continue to affect Sderot and the Negev in the southern part of Israel, but we are equally clear that we do not support the decision taken by the Israeli Government to close the crossings, restricting the flow of humanitarian supplies such as the ones the hon. Gentleman describes. It is also the long-standing position of the British Government that any response by Israel should be in accordance with international law, including the fourth Geneva convention. We also, of course, deplore civilian casualties on both sides of the conflict.

John Spellar: I thank the Secretary of State for condemning the rocket attacks, but is it not a fact that the bulk of the responsibility lies on Hamas, which has allowed terrorist organisations to rain rockets down on Israel in an attempt to kill children there and, indeed, has undertaken terrorist activity against its own citizens in the military takeover of Gaza? Will the Secretary of State ensure that, however much aid is vitally needed by the citizens of Gaza, none of it gets to those terrorist organisations?

Douglas Alexander: We are obviously keen for Hamas to accept the Quartet principles, which were set out some time ago. Equally, however, we are clear that the humanitarian situation is serious. While we unequivocally condemn both the rocket and sniper attacks, of which my right hon. Friend spoke, we are also clear that there needs to be the means by which humanitarian supplies can reach the 1.5 million people in Gaza.

Peter Tapsell: Spokesmen for the Israeli Government repeatedly say that they have not imposed any blockade on Gaza. Is that true?

Douglas Alexander: The crossings are at present closed, other than for very limited entrance for certain supplies. As the OCHA report, to which the hon. Member for Orkney and Shetland (Mr. Carmichael) has already referred, reflects, there is a growing and grave humanitarian situation in Gaza. It is therefore important that all sides recognise their responsibilities and facilitate the entrance to the Gaza strip of exactly the humanitarian supplies that would address that grave situation.

Richard Burden: Does my right hon. Friend agree that one of the real problems facing the people of Gaza is shortage of fuel and electricity, as a result partly of an Israeli air strike on their power plants and partly of the blockade? What are we doing to ensure that electricity supplies get through to Gaza, particularly when, as I understand it, we and the European Union are paying for them to get through?

Douglas Alexander: My hon. Friend is right to recognise that, in addition to the fatalities identified in the OCHA report, the air strikes resulted in an additional 30,000 people being cut off from water supplies—200,000 were already cut off before the incursion—and the electricity infrastructure was damaged. There are at present on average about eight hours of power cuts being suffered each day in the Gaza strip, which is why we are in regular contact with all sides and why we are encouraging through the Quartet the continued progress of the Annapolis peace process. Although there is an immediate humanitarian challenge, the long-term resolution to this conflict ultimately has to lie in the political process.

Gregory Campbell: Obviously, the security of the Palestinian people as well as that of the people of Israel should be at the forefront of all our minds. What discussions has the Secretary of State had with the former Prime Minister of the UK, Mr. Tony Blair, who has taken on a role in the middle east?

Douglas Alexander: I last met special representatives to the Quartet last January and I previously met them at the Paris pledging conference, which is the next major step after the Annapolis conference. There, Tony Blair made clear to me his pleasure in the scale of pledging that was put behind the peace process by the international community. However, there is only so much that the international community can do to support the Annapolis process, which is why we welcome the latest indications that there will be further political discussions within the region in the days to come.

Helen Jones: Following on from what my right hon. Friend the Member for Warley (Mr. Spellar) said, may I tell the Secretary of State that although everyone recognises the sufferings of the ordinary citizens of Gaza, some responsibility must also be placed very firmly on Hamas for its rocket attacks on Israel? Will the Secretary of State therefore ensure that aid given to the citizens of Gaza actually reaches those ordinary citizens rather than the militaristic Hamas? What discussions has he had with the ICRC to ensure that that happens?

Douglas Alexander: I assure my hon. Friend that, once again, we have unequivocally condemned the rocket and sniper attacks on Israel. That has been the British Government's position for a long time. As for the related issue of whether we can be comfortable about the work being done, in this instance, by the ICRC and the United Nations, there are long-standing procedures to ensure that we provide the supplies that are immediately required to meet the humanitarian need, while not providing the political support that my hon. Friend has described, which I do not think any Labour Member would be keen for us to provide.

Malcolm Bruce: The Secretary of State and others are right to acknowledge that the people of Gaza are victims of both Hamas and the Israeli assaults, but will the Secretary of State also acknowledge that the Bethlehem development and investment conference will have limited scope to change things if Israel has no access to Gaza? The same applies to the west bank, where movement and access continue to be restricted although no rocket attacks are being launched in the area.

Douglas Alexander: I find myself in complete agreement with the right hon. Gentleman. I travelled to the Palestinian territories in December and had an opportunity to observe the presentation from OCHA, which made clear the significance of the consequences of the blockages of movement and access that apply not just in Gaza but throughout the west bank. In our discussions both with the Palestinian authorities and with the Government of Israel, we have stressed repeatedly that if there is to be the economic progress that we should like as a result of the Bethlehem development and investment conference, there must be changes on movement and access.

Mark Durkan: According to the Secretary of State, the British Government have consistently said that Israel's actions and response to violence from Hamas and others must comply with international law and meet United Nations humanitarian standards. Have the British Government assessed whether the Israeli Government's recent actions meet those standards?

Douglas Alexander: There are appropriate bodies to adjudicate on international law. I assure the hon. Gentleman that in conversations with Defence Minister Barak of the Government of Israel we made it clear that we are keen to see Israel adhere to international law, whether in relation to the barrier or settlements or in terms of its response more generally. The issue is the subject of continuing discussion between the British Government and the Government of Israel.

Geoffrey Clifton-Brown: Is the Secretary of State aware that a group of leading charities recently described the situation in Gaza as the worst for 40 years? In particular, it cited shortages of essential medical supplies, electricity, fuel and especially water, which are causing increasing misery. What more can the British Government do, working with the Quartet and the temporary international mechanism, to alleviate the growing humanitarian crisis?

Douglas Alexander: I refer the hon. Gentleman to the answer I gave a few moments ago, in which I announced that an additional £2 million would be given to the ICRC to address exactly those concerns. He is right to say that the crisis action report identified the grave humanitarian situation currently affecting the citizens of Gaza. That is why we not only continue to support the United Nations Relief and Works Agency and the ICRC, but have today pledged a further £2 million for the ICRC in recognition of the need to respond to that humanitarian situation.

Louise Ellman: What specific representations has my right hon. Friend made concerning Hamas's callous decision to launch its rocket attacks on Israelis from civilian areas in Gaza such as the United Nations school in Beit Hanoun?

Douglas Alexander: I assure my hon. Friend that we utterly deplore the rocket attacks, not simply because of their location but because of their consequences—the bombing and casualties in Sderot and the Negev in Israel. We take every opportunity in international forums to make it clear that we unreservedly condemn those attacks, and indeed the sniper attacks as well. However, we make it equally clear that we want Hamas to adhere to the Quartet principles that we set out some time ago.

Michael Moore: I join other Members in condemning the violence on both sides of the conflict. I also join the Secretary of State in acknowledging the humanitarian crisis in Gaza.
	In response to a couple of questions, the Secretary of State has said that international bodies are there to judge whether Israel is in breach of its international obligations. Does he agree with my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) that Israel is in breach of the Geneva conventions, and, as I asked him when we last discussed these matters, does he think that the Israeli reaction is proportionate?

Douglas Alexander: I hope that I can offer the hon. Gentleman the comfort for which he is looking in the statements that I and the Foreign Secretary issued on 11 and 21 January and 8 February, where not only did we unequivocally condemn, as he has, the rocket and sniper attacks, but we consistently made it clear that any response by Israel should be in accordance with international law. We deplore civilian casualties on both sides and it is a matter that we repeatedly bring to the attention of the Israeli Government.

Elections

Greg Hands: What steps his Department is taking to promote free and fair elections in developing countries.

Tim Boswell: What steps his Department is taking to promote free and fair elections in developing countries.

Gillian Merron: Free and fair elections are central to better governance and accountability in developing countries, with primary responsibility resting with the relevant Government. Support is given by the UK at elections, including election observation and voter registration, as well as in between elections to Parliaments, civil society and other institutions.

Greg Hands: This is all very valuable work, but does the Under-Secretary think that her efforts have been helped or hindered by her boss's involvement in elections at home, which were criticised in a report from the Electoral Commission as overlooking voter interests— [ Interruption. ]

Mr. Speaker: Order. The question is about elections in developing countries.

Tim Boswell: Further to that, the Under-Secretary wishes to be fair. Given that the Council of Europe, for example, has taken up concerns about our own electoral arrangements in relation to postal voting, will she assure the House that when she advises foreign countries and electoral authorities, she will have regard to the need to be scrupulous in terms of best practice rather than some of the practices that may have characterised recent elections here?

Gillian Merron: I am sure that if the hon. Gentleman has concerns about matters in the UK, he will raise them with the appropriate Secretary of State. It is important that we support not just free and fair elections at election time, but underlying systems and processes. We work hard with Parliaments, media and civil society, and the hon. Gentleman will want to know that we have established a governance and transparency fund to support accountability and governance in developing countries. We will soon be announcing the recipients of that fund.

Lindsay Hoyle: Will my hon. Friend ensure that we get free and fair elections in Tibet? What pressure can be placed on China to ensure that Tibet gets those free and fair elections as soon as possible?

Gillian Merron: I can assure my hon. Friend that we are working with, and will continue to work closely with, the Foreign and Commonwealth Office on that. I will bring his concerns to the attention of the Foreign Secretary.

Hugh Bayley: May I caution the Minister against putting too much reliance on Governments to patrol and police their own elections and encourage her to put more effort into strengthening the capacity of Parliaments to hold the Executive to account? The catastrophe in Kenya happened when President Kibaki stuffed the electoral commission of Kenya. Surely it is for the cross-party forum, the Parliament of Kenya, and not the Government of national unity to reform the law so that the electoral commission of Kenya represents all parties in civil society and has credibility when the next elections come?

Gillian Merron: My hon. Friend has a creditable record in this area through the Westminster Foundation for Democracy and I commend his leadership of that organisation and the work that it does. We support the building up of the capacity of Parliaments and political parties in many of the countries in which we work. That includes transparency and support in terms of the selection of candidates and how campaign issues are articulated. I can assure my hon. Friend that we believe that continued work will be very important in building Kenya.

Andrew Mitchell: Further to the question of the hon. Member for City of York (Hugh Bayley), the hon. Lady will be aware that the Department for International Development has spent more than £50 million in Kenya this year, including £600,000 on election monitoring. What lessons have she and her Department learned from the recent events there?

Gillian Merron: Perhaps I could put on record once again the fact that nobody could have predicted the scale of post-election violence in Kenya, and our approach is very much that it is not business as usual. We did much work before the Kenyan elections, and we now need to move from the not-business-as-usual approach to a transitional period. We are currently providing £50 million in aid, and we are keeping our programme continually under review. I can also assure the hon. Gentleman that we are not providing that assistance through a general Government budget, but instead we are ensuring that it goes direct to the Kenyan people who are most in need.

Andrew Mitchell: Is not one of the most significant lessons the importance of building civil society and holding politicians to account over the long term? Why then, according to the last Kenya country assistance plan, was spending by DFID on governance and accountability cut?

Gillian Merron: Of course, our key role is to ensure that the poorest and most vulnerable people get the aid they need most, so we are ensuring that health and education are receiving such aid. The setting up of the governance and transparency fund, worth some £130 million, will ensure that we increase support for activities that focus on accountability, which I know is of great concern to the hon. Gentleman. We have had many applicants, including Oxfam and other such organisations, and I look forward to making an announcement on that soon.

Tom Clarke: Is my hon. Friend aware that many people understand that the situation in Kenya was extremely difficult and very worrying and wish to congratulate the Secretary of State and his colleagues on the British contribution to finding a solution? Is she also aware that many people would plead with the Department to continue to support Kofi Annan in the excellent work he is doing?

Gillian Merron: I warmly welcome my right hon. Friend's words of congratulation. We have been supporting the Kofi Annan mediation process and will continue to do so. The Government very much welcome the announcement of a peace deal. This is an optimistic and challenging time for Kenya, and it is important that we continue to work within that country to rebuild it so that Kenyans can look forward to peace, stability and further growth.

Nicholas Winterton: What action are the Government taking to guarantee free and fair elections in Zimbabwe? It is important that those elections are fair and free in order to bring about a change of Government in that country.

Gillian Merron: The hon. Gentleman is of course right to say that there need to be free and fair elections, and the reality is that the conditions are not in place. I met with the UK ambassador to Zimbabwe last week, and I discussed that matter with him. The UK will continue to provide support for the poorest through non-governmental organisations and the United Nations. We do not accept the list of observers, so we are working closely with civil society organisations to strengthen the process. I assure the hon. Gentleman and the House that we will continue to monitor and work on the situation with the international community.

Orphans (Malawi)

David Borrow: What steps his Department is taking to support orphans in Malawi.

Shahid Malik: There are 1.5 million orphans and vulnerable children in Malawi, 550,000 because of HIV and AIDS. DFID gives £2 million a year to the National AIDS Commission, which, among things, provides education and care to orphans and vulnerable children through community-based organisations. In 2006-07, just under 1 million orphans and vulnerable children received support. The commission is also supporting a pilot cash transfer, which has helped 35,000 people in four districts, including 17,000 orphans and vulnerable children.

David Borrow: Will my hon. Friend join me in paying tribute to a small charity based in South Ribble, the Friends of Mulanje Orphans—FOMO—which supports 4,000 orphans in Malawi? Will he also ensure that his Department gives as much support as possible to the excellent work that organisations such as FOMO undertake?

Shahid Malik: I am more than happy to recognise the excellent work carried out by organisations such as FOMO, which, as my hon. Friend says, helps 4,000 orphans with school fees, meals and health care through a network of 10 centres covering 70 villages. That is exactly the sort of vital community-based work that Malawi's National AIDS Commission funds. It supports some 1,800 organisations, providing care for orphans and vulnerable children across Malawi.

Gary Streeter: As the Minister said, many of these children are orphaned as a result of HIV/AIDS. Is he therefore confident that enough of the Department's investment in Malawi and elsewhere in sub-Saharan Africa is spent on preventive measures through education, rather than just on treatment? Is it not the case that we will never get to grips with HIV/AIDS unless we can empower people to make informed lifestyle choices to deal with that dreadful disease?

Shahid Malik: The hon. Gentleman is correct. Education is vital in the fight against AIDS, but so, too, is health care. It deals with the symptoms; he is talking about the cause. I am pleased to let him know that we are investing £100 million in Malawi over six years to deal with many of these issues and that antiretroviral treatments are now available to 130,000 people compared with a figure of just 3,000 in 2003.

Ann McKechin: As my hon. Friend will be aware, the Scottish Executive have been running a programme in Malawi for some years. Given the Paris declaration on harmonisation and alignment, does he agree that it is important that the programme should work in tandem with DFID to ensure the best and most effective aid programme for Malawi?

Shahid Malik: My hon. Friend is right. Part of the Paris declaration and its principles is that there should be alignment between different funding targeted at various areas—that would apply in Malawi too.

Nigel Evans: Malawi is one of the poorest countries in the world—it is certainly one of the poorest countries in Africa. Does the Minister agree that the best help we can give its orphans is to reduce the number of children being orphaned in the first place? Ensuring access to antiretroviral drugs is vital; they must be properly delivered. What can he do to ensure that the numbers of doctors and nurses fleeing Malawi to come to countries such as the United Kingdom and the United States of America are greatly reduced?

Shahid Malik: The hon. Gentleman is, of course, right. A serious challenge for the developing world, and for Malawi in particular, is the fact that health workers leave those areas. I am pleased to say that between 2003 and 2007 their migration decreased by 71 per cent. The investment of £100 million to which I referred in part deals with some of those challenges. The situation has been helped by the code of conduct that this country has put together on employing overseas health workers. As a result of that £100 million investment, salaries have increased by 52 per cent. and a series of development incentives is in place for workers in Malawi. We are supporting the doubling of the number of nurses and the trebling of the number of doctors, and I am sure that he will very much welcome that.

HIV/AIDS

Graham Allen: What progress is being made in halting and reversing the spread of HIV and AIDS globally by 2015 in accordance with millennium development target 7.

Gillian Merron: Last year, the number of people living with HIV and AIDS levelled off for the first time. The number receiving antiretroviral treatment rose from 400,000 in 2003 to more than 2 million in 2006.

Graham Allen: Although we all want to help people who have HIV and AIDS, does the Minister accept that we also need to ensure that proper programmes are in place to prevent the further spread of AIDS? Will she tell us what the Department is doing to help to spread the promotion of those educational programmes, in particular the further use of condoms in these areas, so that HIV/AIDS is stopped before it can begin?

Gillian Merron: My hon. Friend makes an important point, given that nearly 7,000 people are newly infected with HIV every day. Indeed, prevention is crucial to stopping and reversing the spread of HIV/AIDS. We need to improve people's knowledge, change attitudes, give women more control over their own lives, promote the availability and use of condoms and boost education. On all those matters, DFID is working directly with countries and co-ordinating with other donors.

Hywel Williams: What steps are the Government taking to promote peer education on HIV and AIDS in developing countries by non-governmental organisations such as Christian Aid? Will she commend the work done by the pioneering group of young people from Wales that recently visited Sierra Leone?

Gillian Merron: I do indeed endorse peer education programmes, which are very much part of the work that we do, and I commend the young people to whom the hon. Gentleman refers. I have recently met groups of young people who are extremely committed to peer education. People listen to those with whom they identify.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Michael Jabez Foster: If he will list his official engagements for Wednesday 12 March.

Gordon Brown: This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Michael Jabez Foster: The strength of the economy, with the minimum wage and tax credits for children, coupled with my right hon. Friend's commitment to reducing child poverty, means that in my constituency and elsewhere, thousands of young people are now free from that scourge. Given the ambitious target of my right hon. Friend and the Labour Government to eradicate child poverty by 2020, what further measures—[ Interruption.]

Mr. Speaker: Order.

Gordon Brown: As a result of the work of the Chancellor and the Government, there are 3 million more people in work, and half a million children have been taken out of poverty. There are 2 million people benefiting from the minimum wage and 12 million children benefiting from child benefit and child tax credits, taking more people out of poverty. As a result, the number of people in absolute poverty has halved and 600,000 children are now out of poverty. We will do more in the next few years, but this would not be possible if, based on figures that do not add up, we cut £10 billion from public expenditure to pay for tax cuts. We will pursue a path of stability and tackling child poverty.

David Cameron: I am not sure that the planted questions get any better.
	I would like to ask the Prime Minister about something that he rightly gave a very high priority: the humanitarian crisis in Darfur. Since the start of this year, another 80,000 people have been driven from their homes, aid workers have been killed, and access to humanitarian relief has dramatically reduced across Darfur. Even areas such as el-Fasher, which I visited 16 months ago, are sometimes inaccessible because of the Janjaweed militia. Seven months ago, the Prime Minister promised quick and decisive action, but will he confirm that on any objective measure, the situation on the ground has actually got worse?

Gordon Brown: There are 4 million people in famine or dependent on food aid. There are 2 million people who have been displaced, and 400,000 people have died. This is a humanitarian tragedy of colossal proportions, and the world must act. I believe that we must strengthen our sanctions against the Sudanese Government. We should have military sanctions for the whole of Sudan.
	I believe also that the United Nations force—I have talked to the Secretary-General—must be in place as quickly as possible, that there should be no further delays and that the African Union must make its contribution. But I believe most of all that we must get people to the peace table. That is why it is important not only that the Government of Sudan come to the peace talks, but that the rebel groups join the peace talks, which they have not done before. We will continue to step up our efforts. The Foreign Office Minister, Lord Malloch-Brown, has been there recently. We have asked the Chinese to intervene in the situation, and of course I would like the Secretary-General of the United Nations to visit the region very soon.

David Cameron: The Prime Minister quite rightly mentions the joint African Union-UN force that everyone signed up to. Can he confirm that although seven months ago—last July—we were told that 20,000 peacekeepers and nearly 4,000 police would be deployed, today there are only 10,000 of them there, even on the most optimistic estimates? Recent reports say that they have no military helicopters whatsoever. Does he agree with me that this is completely unsatisfactory? The Prime Minister himself said that he would consider visiting Darfur. What steps is he now proposing to make sure that the international community rises to this important challenge?

Gordon Brown: The President of France, Mr. Sarkozy, and I have discussed the provision of helicopters and what more we can do. It is not only Sudan that is involved, but Chad as well. We have also discussed the creation of a no-fly zone, but the area in question is the size of France, which makes it very difficult to police. I believe that the way forward is to move to peace talks as quickly as possible, and I hope that right hon. and hon. Members in all parts of the House will join me in pressing the rebel groups, as well as the Government of Sudan, to join those talks.

David Cameron: Let me pick up on one point the Prime Minister just made, about a no-fly zone. That is important. Last year, Tony Blair said clearly that
	"a no-fly zone to prevent the use of Sudanese air power against refugees and displaced people"
	is vital, and I agree with him. Anyone who has been to Darfur and talked to people in the refugee camps will have heard them say, "It wasn't just the Janjaweed militia; it was the Sudanese army that drove me out of my village—they were coming out of Sudanese aircraft." The no-fly zone is vital, but a month ago, the Prime Minister said in a written answer that there had not been an assessment of the logistical challenges of implementing a no-fly zone. Will he confirm today that he remains in favour of a no-fly zone and will press for it very hard?

Gordon Brown: I simply emphasise that the most important thing is to get people to peace talks. That is the only way to bring the situation to a conclusion. As for a no-fly zone, I have considered it and I would like to move ahead, if it were at all possible; however, we have to accept that the area to be policed is the geographical size of France and large numbers of aeroplanes would be needed. More important at the moment is to get a ceasefire and, as a result, stop the aerial bombing of civilians. I believe that we can make progress in that respect and then get people to the peace talks. That is how to solve the problem.

Eddie McGrady: The Prime Minister will be aware that the First Minister of Northern Ireland and the Democratic Unionist party have vetoed the devolution of justice and policing to Northern Ireland. When the Prime Minister comes to Northern Ireland in May for the US investment conference, will he give a clear, positive message that completing devolution and maximising investment are the twin pillars of progress and stability in Northern Ireland?

Gordon Brown: The hon. Gentleman is absolutely right. The devolution of justice and policing will complete the implementation of the St. Andrews agreement. However, a great deal of progress has been made in Northern Ireland, and I pay tribute to the First Minister. It is great news that the Queen is able to visit Northern Ireland in the next few days; and the conference on investment in Northern Ireland will be held in the next few weeks, with, I hope, substantial American participation. I also hope that all parties will follow the report produced for the Northern Ireland Assembly on the issues that are yet to be resolved in justice and policing, and move forward to reach agreement on those matters quickly.

Nicholas Clegg: Does the Prime Minister agree with me that unless we get big money out of British politics, there is a real risk that our political system will end up like America's, where influence and power are controlled by cash? Does he not understand the British people's disgust as they see the two larger parties refusing to deliver real reform?

Gordon Brown: I agree that there should be a limit on election expenditure; it should be properly enforced and it should be lower than the previous limits. There should also be a limit on donations. I agree with the right hon. Gentleman on that, although I see that he has changed his policy: once, he said it should be £10,000, but I gather from his speech at the weekend that he now thinks it should be £25,000. As for the other aspects of the matter, I believe that there should be transparency in politics and that all the information should be published.

Nicholas Clegg: We have heard all this before. The Prime Minister is doing nothing. Why is he using the Tory attachment to big money from Belize as an excuse to sit on his hands? Is not the truth that both he and the Conservatives are so busy protecting their own vested interests that they will not do what is right for Britain?

Gordon Brown: I do not think that the right hon. Gentleman followed me. I answered his question and said what we should do. There should be limits on national election expenditure and on individual donations, and there should be greater transparency. I hope that we can agree on this, and that all parties will do so.

Stephen Hepburn: The Prime Minister will be aware of the disgraceful plight of pleural plaque sufferers in this country, who are being denied their rightful claim to compensation by the courts. Does he agree that it does not matter how the issue is dressed up: pleural plaques are a working-class industrial injury caused by negligent exposure to asbestos? Will he meet the group of MPs who have been campaigning on the issue, so that we can bring an end to this dreadful, Victorian scandal?

Gordon Brown: I am grateful to my hon. Friend for raising the House of Lords judgment, which now has to be answered. Asbestosis and mesothelioma are terrible diseases, and all of us who have seen the effects that they cause know that we have to do more to help the victims of those diseases. On pleural plaques, we are looking at the matter at this very moment. We will publish a consultation document soon. We are determined to take some action, and I am very happy to meet his delegation.

Andrew MacKay: When the Prime Minister was Chancellor of the Exchequer, it was widely spun that he gave Tony Blair only two days' notice of his Budget proposals. Can we assume that the current Chancellor has been more co-operative?

Gordon Brown: The information that the right hon. Gentleman has is completely wrong, and it is because of co-operation in government that we are the Government who have created more stability than any Government in the history of this country.

Howard Stoate: As my right hon. Friend will know, this is prostate cancer awareness week, and 10,000 men die of prostate cancer every year, making it the commonest cause of cancer deaths in men. However, there are significant inequalities across the country in cancer death rates for prostate disease. Will my right hon. Friend commit to reducing health inequalities and improving research, treatment and awareness of that terrible condition, so that we can bring the death toll down?

Gordon Brown: I agree entirely with what my hon. Friend says. More has to be done. There has been a 16 per cent. fall in cancer deaths, and there is more availability of help, check-ups and screening. At the same time, people who are suspected of having the disease are treated far more quickly than ever before, but we have to do more about the issue. It is only possible to do more if we continue to spend and invest in our national health service.

David Cameron: I believe that there is a strong case for more free votes in Parliament, and there is an unanswerable case for free votes on matters of conscience. One such example is the Human Fertilisation and Embryology Bill. Can the Prime Minister explain why votes on matters-of-conscience issues were whipped in the House of Lords, and can he tell us why his official spokesman has said that the Bill will not be subject to a free vote in the House of Commons?

Gordon Brown: On the issues that arise in the Bill, one is a potential amendment on abortion, and that will be subject to a free vote in the House, as is absolutely normal. On the Human Fertilisation and Embryology Bill, the right hon. Gentleman must know that it initially came before a Joint Committee of both Houses. Recommendations were made, and they were then part of the Bill. The Bill was then put through the House of Lords. It will come to the House of Commons, and we will make a decision about the way in which votes on it will take place in due course.

David Cameron: Let me tell the Prime Minister what was whipped in the House of Lords: votes on the production of hybrid human-animal embryos, the requirement for IVF clinics to have regard to a child's need for a father, and the circumstances under which saviour siblings can be created. Those were all whipped votes, and they should not have been. He says that he will make a decision. Why not break the habit of the lifetime, make the decision now and tell us what it is?

Gordon Brown: I am explaining how the Bill arose. It arose from a Select Committee, which made recommendations that formed the basis of the Bill. The Bill then went through the House of Lords. We will make our decisions on the issue in the normal way, but let me be absolutely clear that we respect the conscience of every Member of the House in this matter.

David Cameron: This just is not good enough. The Prime Minister's official spokesman said that the Bill would be treated in a normal way: there would not be free votes. If that is to change, why cannot the Prime Minister tell us? Why does he not listen to Lord Alton, who said in the House of Lords:
	"Sometimes I despair that even after such an extraordinary debate as we have had here, there are Whipped votes. I am sorry that the precedent of 1990, when the original legislation was introduced and free votes were allowed throughout on these matters, has not been followed today"?—[ Official Report, House of Lords, 15 January 2008; Vol. 697, c. 1232.]
	Tell us now: can we have free votes on all the conscience issues in the Bill—yes or no?

Gordon Brown: If the right hon. Gentleman wishes to call a free vote for his party, that is a matter for him, but let me say this: he is not understanding the way in which the Bill arose. It arose from recommendations made by a Joint Select Committee of the House. As I have said before, we will respect the conscience of every Member of this House.

Kali Mountford: Thanks to the magnificent work of Kirklees primary care trust, health services have been transformed in my area. The shadow Health Minister predicted that accident and emergency would be closed by now. Instead, millions of pounds are being spent in community health and mental health services. Will my right hon. Friend give me an assurance that success will continue to be rewarded and that sound financial management will be continued by the Government?

Gordon Brown: It is possible to spend more on the national health service in every area of the country because of our commitment to a 4 per cent. real-terms rise in health service expenditure over the next few years. That would not be possible if we accepted proposals for £10 billion of tax cuts, which would have to be paid for by £10 billion of cuts in public expenditure. That would inevitably mean cuts in the national health service. That we will not do. It is for others in the House to decide what they do on health.

Alistair Carmichael: For months the Government have been warned that continued unfair treatment of staff in the Maritime and Coastguard Agency would lead to strike action, and last week, for the first time ever, it happened. Fortunately, there was no loss of life, but next time we might not be so lucky. Will the Prime Minister intervene to impress upon senior management in the coastguard agency the need to engage with their own staff and end this dangerous and damaging dispute?

Gordon Brown: I am very saddened by the strike. I understand that the management remain keen to talk to the unions on the issue to ensure that the situation is resolved as soon as possible. Safety at sea is a priority, and I can assure the hon. Gentleman that nothing will be done to allow industrial action to affect the safety of people at sea.

Emily Thornberry: Many of my constituents rely on London's buses in order to get about and they would be greatly alarmed if they thought that the service was under threat. With pensioners across the country about to enjoy free off-peak travel, does my right hon. Friend agree that this a timely moment to remember how important it is that London has a well run and properly funded bus service?

Gordon Brown: Bus usage in London is at its highest level since 1965. In other words, there are more people using buses in London than at any time for 40 years. I understand that that would be put at risk by proposals that would cost £100 million if applied by the Conservative party. That would mean that bus fares rose. It would discourage ordinary people from using the bus service. We are determined to maintain bus services in London.

Elfyn Llwyd: If the Prime Minister were to set about the rather daunting task of trying to persuade trade unionists back into the Labour fold, would he refer to the 40,000 job cuts under Gershon, the below-inflation pay rises in the public sector, or perhaps his Government's support for the evil regime in Colombia? Which would be his sales pitch?

Gordon Brown: I would refer to the minimum wage that we implemented in the teeth of opposition from other parties. I would refer to the right to be a member of a trade union, which we restored after what happened at GCHQ Cheltenham, and I would refer to the 3 million jobs created by the Government.

Barry Gardiner: Given the 40 per cent. increase in funding to Brent council under the Government, can the Prime Minister explain why a disabled person in my constituency is faced with a 214 per cent. rise in their cost of care, or a grieving family a 143 per cent. rise in the cost of burying a loved one? Does that not show that where there are Liberal and Tory coalitions, they always target the vulnerable and the disadvantaged?

Gordon Brown: Brent council has received extra money from central Government to enable it to undertake the public services that it should be performing. Therefore it is unfortunate that a Tory-Liberal coalition is cutting vital public services in the area. We have provided the money. They have cut the services.

Bob Russell: I thank the Prime Minister for his words of support for military personnel wearing their uniform in public. In addition, I hope for his support for an armed forces day. Will he see whether the Public Order Act 1986 can be amended to make it a specific offence for somebody to insult a member of Her Majesty's armed forces who is wearing uniform in public?

Gordon Brown: We are proud of our armed forces. Not only do they have the right to wear their uniforms in public when they are in the United Kingdom, but we welcome the fact that they do. I know that the hon. Gentleman is proud of what happens in his own constituency as well.
	I believe that the police do have powers to deal with those people who abuse or intimidate our armed forces; if they need them, they can use those powers already. The public are on the police's side if they take action to ensure that our armed forces achieve both the recognition and the acclaim that they rightly deserve.

Jim Cunningham: Will my right hon. Friend give us a bit more information on what he is doing about humanitarian aid for Darfur? At the same time, we appreciate that the Government are trying to initiate peace talks.

Gordon Brown: The UK is the second largest donor to Sudan; we have a programme of £114 million. At the same time, we have spent to date £290 million on humanitarian aid in Darfur throughout the last few years. We stand ready to provide additional assistance if the peace talks are happening and working and if we can get a proper settlement, backed by a United Nations force in the area.

Boris Johnson: Given that the Prime Minister has once again misrepresented my policy and given that the hon. Member for Islington, South and Finsbury (Emily Thornberry) said herself last week that there was scarcely a child in her constituency who had not been mugged, will the Prime Minister now join me in agreeing to reallocate some of the Mayor's publicity budget increment for next year to put another 440 uniformed police community support officers on some of the rowdier bus routes, to give Londoners on buses the security that they want?

Gordon Brown: There are more police in London than ever before as a result of the decision—[Hon. Members: "Hear, hear!]

Mr. Speaker: Order. The hon. Member for Henley (Mr. Johnson) cannot hear the Prime Minister's answer.

Gordon Brown: There are more police in London, and it is the result of the Labour Mayor. If I may say so, the hon. Member for Henley must answer for what he says. He says:
	"We have got to be absolutely clear where the scope for real economies is and the real big ticket for spending is the Metropolitan Police and Transport for London. That's where the real savings, believe me, are to be found."
	It is a cuts manifesto from the Tories.

Chris Mole: Unemployment in Ipswich has fallen by 1,500 or nearly one half since 1997. That is a success both for the Government's economic policies and for each and every one of the individuals who have returned to work. In the face of global competition, regional cities such as Ipswich need every bit of home-grown business talent that they can acquire. Will my right hon. Friend tell me what his new national enterprise academy will achieve in constituencies such as mine?

Gordon Brown: I am pleased that the Secretary of State for Innovation, Universities and Skills has announced proposals for more universities and higher education institutes in cities and towns of this country. On Monday, we announced the creation of a new national enterprise academy, to be led by Peter Jones; we will choose a site in a part of the country that needs that enterprise academy. There will be more apprenticeships over the next few years in every area of the country. There were 70,000 apprenticeships when we came into power. There are now 250,000 apprentices. That will double over the next 10 years; that is what we mean by equipping Britain for the future.

Tom Brake: Sutton does not get decent homes funding and its properties are in greater need of investment than those of almost any other London borough, yet from April this year £10 million of the rent from Sutton's tenants will be used to improve housing in other boroughs. Would the Prime Minister be willing to meet a delegation of Sutton tenants to explain why this is going to happen?

Gordon Brown: We have doubled expenditure on housing, particularly social housing, over the last few years. We have made it easier for people to buy their own homes by raising the stamp duty threshold as well, and we have introduced equity sharing to make it possible for more people to buy their homes, even if they do not have that amount of money when they start to become an owner-occupier. Those are all measures that we are taking to improve home ownership. I hope that councils around the country will support us in our aim to build 3 million more houses by 2020.

Colin Challen: Ignoring the lesser ambitions of other countries, the German Government have set themselves a carbon reduction target of 40 per cent. by 2020. Can we join Germany in a new arms race—a carbon reduction arms race—whereby we will win the new jobs, new technologies and new exports, and a clean environment?

Gordon Brown: I have to say that we are the country that is meeting our Kyoto obligations. We will continue to do so, and we will also press the international community to move to a higher level of ambition for 2050. At the moment the ambition is to reduce emissions by 60 per cent. We are asking our committee on climate change to look at 80 per cent. That is the sort of ambition that we all need, and I hope that every country in the European Union will support us.

Robert Goodwill: I am holding up a can of beef from a ration pack issued to the Yorkshire Regiment in Afghanistan, where I recently had the privilege of meeting many of those there. On the base of the tin it reads, "Produce of Argentina". Does the Prime Minister agree that our troops deserve the best, which in this case means British, or even Scottish, beef?

Gordon Brown: We continue to look at how we can improve procurement. I will take what the hon. Gentleman says and look at it with the Chief of the Defence Staff and others. It is very important that we do the best by our forces, and we will do so.

Fiona Mactaggart: A strong economy has meant fewer unemployed young people in Slough, but many of them do not have the skills to compete for the work that is available. I am glad about the Prime Minister's announcement of extra apprenticeships, but can he do more to ensure that employers commit to high-quality work-based training for young people so that they can compete for well-paid work?

Gordon Brown: I had the privilege of visiting my hon. Friend's constituency when we launched the new deal to give young people and adults new opportunities for employment. I still hope that there would be all-party support for the maintenance of the new deal. As far as adult learners are concerned, she is absolutely right. We need to do more to persuade employers, particularly small businesses, to train their work forces. That is why we have introduced train to gain; why we are giving every adult under 25 the right to train up to A-levels even if they have missed the first chance at school; and why all adults, of whatever age, are given the chance to train to basic level 2. We are doing more than ever to train people for what is a new economy where we are going to need the skills for the future.

Jeffrey M Donaldson: Does the Prime Minister agree that it would be entirely wrong to devolve policing and justice powers to the Northern Ireland Assembly while the IRA army council remains in place?

Gordon Brown: I understand that the hon. Gentleman has chaired the Northern Ireland Assembly Committee on these matters. The Committee debated these issues, and I gather that it reported yesterday. It agreed to forward its report to the Secretary of State. I know that decisions are being recommended by that Committee and that there are controversial issues. I think that the best thing is that discussions take place on those issues and we see how we can resolve them.

Jamie Reed: My right hon. Friend the Prime Minister has seen for himself the devastation that flooding causes in homes, communities and families. The Government set aside millions of pounds to assist the areas suffering from flooding. However, this is a matter not just of natural weather events, but of failing infrastructure in many parts of the country. How can people in my constituency, whether in local authorities or businesses, access those moneys set aside by Government?

Gordon Brown: I am grateful to my hon. Friend, who has taken a very big interest in these matters. Expenditure on this issue has risen; in fact, it has doubled in the past 10 years. We will raise expenditure further, because it is absolutely vital that we have the investment against flooding and coastal erosion risk. We will spend £800 million on that by 2011.

Graham Stuart: The official inquiry into the foot and mouth outbreak at Pirbright has found direct ministerial responsibility. Can the Prime Minister tell the House how Ministers are to be held to account and when a full and proper animal tracing process will be put in place?

Gordon Brown: I do not accept the hon. Gentleman's interpretation of that report at all. What the report actually says is that the action taken by the Government was immediate and instant and was the right thing to do. It also says that we were far better prepared than for any previous foot and mouth outbreak. It makes recommendations for the future, and we will look at all those recommendations. We are already investing and changing the management at Pirbright to avoid these things happening in the future. I hope that the hon. Gentleman would give the House a fair reflection of Mr. Anderson's report.

Chris McCafferty: My right hon. Friend will be aware of reports this week that up to 4,000 forced marriages take place every year, and that hundreds of ethnic minority children are disappearing from school rolls, who may have been forced into marriage against their will. Will he look into the role of education welfare officers and those tasked with responsibility for children's absenteeism from school, and perhaps look to—

Mr. Speaker: Order.

Gordon Brown: My hon. Friend raises the important issue of the 3,000 young women—and perhaps many more—who are victims of forced marriages. The Home Office and the Foreign Office set up a joint unit in 2005, which is handling 5,000 inquiries a year. All the matters that she raised will be looked at carefully; this is not tolerable and we must do everything we can to support victims of forced marriages.

Orders of the Day
	 — 
	WAYS AND MEANS

Financial Statement

Mr. Deputy Speaker: Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech copies of the Budget resolutions will be available to them in the Vote Office.

Alistair Darling: The core purpose of this Budget is stability, now and in the future. Its core values are fairness and opportunity, founded on stability and strength.
	In every country in 2008, every Government have one aim: to maintain stability through the world economic slowdown. Britain, with its central role in the world's financial system, is no exception. But with low inflation, record levels of employment, and unemployment at its lowest level for a generation, and with the action that we took last year to curb inflation, Britain is better placed than other economies to withstand the slowdown in the global economy.
	This year's Budget is a responsible Budget that will secure stability in these times of global economic uncertainty. We will do everything in our power to maintain stability, keeping inflation and interest rates low and maintaining our record of growth. Whilst other countries have suffered recessions, the British economy has now been growing continuously for over a decade—the longest period of sustained growth in our history. Because of the changes we made to entrench stability and increase the flexibility and resilience of our economy, I am able to report that the British economy will continue to grow throughout this year and beyond.
	Even in today's difficult and uncertain times, we are determined that we will not be diverted from our long-term aim: to equip our country for the challenges of the future, to confront climate change and to end child poverty in a generation. This Budget is about equipping Britain for the times ahead and making sure that everyone, no matter what their circumstances, can exploit their full potential. It is about building a fairer society, offering more opportunity—a fair Britain in which everyone can succeed.
	Throughout the world, economies have benefited from the globalisation of trade and investment, which has delivered strong world growth. Here in Britain, our openness, our global reach and our history of scientific invention and creative success make us uniquely placed to succeed in the global economy. But with the benefits of globalisation, we see, too, how problems in one part of the world can quickly spread to another. Turbulence in the global financial markets, which started in the American mortgage market, has affected all economies, from the United States to Asia, as well as Europe.
	We have seen significant disruption across many credit markets, with a number of them barely functioning at all, and since the turn of the year, global stock markets have been affected. This poses a major risk to the world economy, and so we welcome yesterday's commitment by the world central banks, including the Bank of England, to address these concerns.
	Here, the action that we took last autumn to support Northern Rock and protect depositors and savers means that despite seeing the worst period of financial disruption for a generation, we have maintained confidence and stability in the banking system.
	Between the early 1970s and the mid-1990s, the UK was one of the least stable economies in the G7. Today, we are the most stable. In the past, our economy suffered from high unemployment and high inflation, but today unemployment is lower than in Germany, France and Italy.
	Welfare reform makes work pay and encourages people off benefits. Our strengthened competition regime has increased the flexibility of product and labour markets, backed by fair employment laws.
	So the reforms that we have made since 1997—independence for the Bank of England and tough fiscal rules—mean that Britain is now more resilient and more prepared to deal with future shocks, and it is better equipped to meet the challenges of rapid global change.
	We are developing new strengths in the industries of the future—the creative industries account for 7 per cent. of our economy; pharmaceuticals account for a quarter of the UK's research and development.
	Ours is the only major industrial economy to see an increasing share of trade in global services—from 7 per cent. a decade ago to 8¼ per cent. today.
	In the knowledge-intensive services, the UK is second only to the United States. High-tech manufacturing has grown by 30 per cent. in the last 10 years.
	Driven by improved productivity, the UK's GDP per head—the average income for every man, woman and child—has gone from the lowest amongst the group of seven leading industrial economies in the early 1990s to being second only to the United States last year.
	Right across the world countries have lowered their forecasts for growth in the coming year.
	In Japan growth is forecast to be 1.4 per cent., in the euro area and the United States, 1.6 per cent., and in Canada, 1.8 per cent. Even in the fastest growing markets—China, India and Brazil, which have enjoyed record growth in recent years—it is expected to slow. Despite the slowdown in the world economy, in 2007 the British economy grew by 3 per cent.—the fastest growth of any major economy.
	This year my forecast is that—as growth in the world economy slows further—growth in the British economy will be between 1¾ per cent. and 2¼ per cent. in 2008, but faster than that in Japan, the US and the euro area.
	I expect growth to shift towards companies and exports, with growth rising to 2¼ to 2¾ per cent. in 2009 and 2½ to 3 per cent. by 2010. My forecast shows that the UK economy will continue to grow throughout this period of global uncertainty—a view supported by the Bank of England, the International Monetary Fund and the Organisation for Economic Co-operation and Development.
	In the past, inflation has overshadowed many Budgets. From the 1970s until the early 1990s, the British economy suffered through the failure of successive Governments to deliver economic stability.
	We have seen recent increases in world food, fuel and energy prices. The reforms that we have made since 1997 mean we can be confident about the inflation outlook. There will be no return to the inflation rates of the early 1990s.
	As is happening in many countries because of commodity prices, inflation in the UK will rise in the short term as higher oil and food prices feed through into domestic inflation. But inflation is forecast to return to target in 2009 and remain on target thereafter.
	The success of the Monetary Policy Committee and the resilience of the UK economy is clear. Energy prices have tripled since 2002, but over this period inflation has averaged just 2 per cent. and growth has averaged 2¾ per cent.
	To provide certainty and to build on this foundation of stability, I am today writing to the Governor of the Bank of England to re-affirm that the inflation target for the Monetary Policy Committee remains 2 per cent. on a CPI basis, which will entrench our commitment to low inflation.
	The discipline we have shown on pay in the public sector will support the Bank of England in maintaining low and stable inflation. The reforms we made and this hard won stability mean that—whereas in previous decades, the UK economy suffered more than other economies in the face of global economic downturns—we enter this period of uncertainty better placed than any other major economy. For that reason, I will continue to reject proposals for a £10 billion programme of unfunded tax and spending commitments, which would put that stability at risk.
	Our fiscal policy, like our monetary policy, is designed to support stability. It is founded on tough fiscal rules underpinned by the code for fiscal stability and forecast on the basis of cautious assumptions, which are audited by the independent National Audit Office. Our fiscal rules—to keep debt low and stable and to borrow only for investment over the economic cycle—deliver sound public finances in the medium term. They protect public investment and they allow fiscal policy to support monetary policy at the right time to support economic stability and growth.
	Over the past 10 years, at all times we have taken the necessary action to meet our fiscal rules. The disciplines we have imposed mean that borrowing is much lower than it was before 1997, and so too is debt. Between 1979 and 1997, borrowing was 3.4 per cent. of national income. Since 1997, it has averaged just 1.2 per cent. Debt, which at the start of the economic cycle in 1997 was 43.3 per cent., has now fallen to 36.6 per cent. of GDP. It is precisely our commitment to this discipline and stability that gives us the flexibility now to respond to the global economic challenges we face today.
	Given the fundamental strength of our public finances, it is right to allow fiscal policy to support monetary policy over the period ahead, helping to maintain stability in the face of global downturn. For environmental reasons, we will increase fuel duty by ½p per litre in real terms from 2010. Fuel duty is due to rise again in April, but because I want to support the economy now and help business and families, I will postpone that increase until October.
	I can tell the House that our Budget projection for the current budget balance in 2008 will come in as forecast. Our projection for net borrowing, at £36 billion, is £1.4 billion lower than I forecast at the time of the pre-Budget report. Debt this year is also forecast to be lower than the pre-Budget report, at 37.1 per cent. As a result of the decisions in this and recent Budgets that come into effect this year—including a reduction in the main rate of income tax from 22p to 20p—fiscal policy is able to provide real support for the economy this year. This is a responsible approach—within the disciplines of our fiscal rules—that will help entrench the resilience of the UK economy.
	Borrowing next year, which peaked at 7.8 per cent. of national income by 1993—that is equivalent to £110 billion today—next year will rise to £43 billion, some 2.9 per cent of national income, less than at its peak and less than the average level of borrowing between 1979 and 1997. And because of the decisions taken in this Budget, it will fall to 2.5 per cent., then 2 per cent., then 1.6 per cent. and then 1.3 per cent. by 2012-13, supporting stability and resilience in the economy. That is £38 billion and then £32 billion, £27 billion and £23 billion by 2012-13.
	Even taking into account the turbulence in financial markets and the support we are providing to the economy now, the current balance this year is in line with my forecast at the pre-Budget report, at minus £8.8 billion. Next year it will be minus £10 billion, then minus £4 billion, before returning to a surplus in 2010 of £4 billion, then £11 billion and then £18 billion by 2012, forecast to meet the golden rule over the economic cycle. The Budget shows that we are meeting our first fiscal rule—the golden rule—with the current budget in surplus over the economic cycle.
	In the previous two cycles, the then Government failed to meet the golden rule. In the cycle between 1986 and 1997, they failed by a margin of £240 billion, and in the cycle from 1977 to 1986 by £140 billion. In the past, the then Government borrowed to fund the immediate pressures of the day, with no long-term return for the taxpayer. It is vital that today our fiscal discipline means that over the cycle we borrow only to invest. Vital investment—in transport, schools and hospitals—has been protected and increased. So whereas in 1996-97 public sector net investment was £5.4 billion, over the forecast period it is set to rise further from £33 billion next year to £37 billion in 2010—the highest in three decades.
	Borrowing for investment within the fiscal rules means that we will meet our second fiscal rule—the sustainable investment rule—in each year and over the cycle. This year, debt will be lower than in the US, lower than in the euro area and lower than in Japan. Debt levels are forecast to be 38.5, 39.4, 39.8, 39.7 and 39.3 per cent of GDP by 2012-13: every year lower than in 1997.
	In the 18 years between 1979 and 1997, investment increased by only 20 per cent. in cash terms and reached a low of just 0.3 per cent. as a share of national income. But I can tell the House that, by 2011, investment will have increased by 500 per cent. since 1997 and will have trebled as a share of national income. By 2011, we will have seen the longest sustained expansion of investment in public services since 1945. It is an achievement that we can be rightly proud of, and we remain committed to continued investment in these public services.
	Building on the platform of stability provided by the fiscal rules, successive spending reviews have delivered sustained increases in spending addressing the backlog of underinvestment in public services. Public spending grew by 3.6 per cent. a year in real terms between 1997 and 2007. Following the comprehensive spending review last October, public spending in the coming three years will grow by 2.2 per cent., building on past increases and underpinned by stretching value for money reforms.
	In 10 years, spending on health has almost doubled, and spending on education is up by 58 per cent. As a result, waiting lists are down, and school standards are up. Transport spending is now 90 per cent. higher, with more people using public transport than ever before.
	Aid for the world's poorest countries has doubled in real terms. The defence budget has seen the longest period of increased spending in a generation. This year, we again expect to spend over £2 billion more supporting our troops on the front line, including £900 million on military equipment.
	I want to take this opportunity to pay tribute to our servicemen and women, and their families, in Iraq and Afghanistan. We are deeply proud of the bravery, professionalism and courage they display in serving our country.
	This has been an exceptional commitment to improving public services. By 2010-11, we will have seen the longest sustained expansion of investment in public services in recent history. In 1997, the annual cost of servicing our national debt was 9 per cent. of public spending. Today, it is 5 per cent., freeing up an extra £23 billion each year to invest in public services—around half the entire budget for schools. In the early 1990s, as much as three quarters of all new public spending went on debt and social security costs. The figure today is just a third of that, allowing us to target spending where it is needed.
	We have turned welfare into work and borrowing into wealth creation, and it is essential that we continue to help everyone who can get into work to do so, so we will bring forward further proposals to reform housing benefit to ensure that work pays. From April 2010, all long-term recipients of incapacity benefit will attend work capability assessments, helping them into work. These reforms will continue to free up resources for investment.
	It is right that, like any other organisation, the public sector is as efficient as possible and that it delivers value for money. Over the past year, public sector employment has fallen. At the same time, private sector employment has grown strongly, leading to record levels of employment, which again underlines the resilience of the British economy.
	All Departments have now published plans that will deliver another £30 billion in savings each year from 2010. All these savings will be reinvested in services and will examine all major spending areas to identify where further reform can be made to deliver better value for money and to maintain improvement in the public services.
	The Prime Minister has made it clear that spending must be matched by reform. Reform remains vital. It is not optional; it is essential. It is common sense. Since 1997, we have responded to people's expectations for better public services after decades of underinvestment and neglect. We have driven up standards, developed a greater diversity of providers, tackled failing services, and ensured that the maximum benefit was gained from the investment that we put in.
	Ten years ago there were 600 schools in which less than a quarter of pupils gained at least five good GCSEs; today, there are fewer than 50. Compared with 1997, 10 per cent. fewer people die from cancer each year thanks to faster and better treatment and more specialist doctors. But the test for public services in the future is not whether they are better than before or simply good enough. It is whether they are as good as they can be. So if the focus of the past decade was on repairing the old, the focus of the next must be on developing genuinely world-class services.
	After a decade of hugely increased investment, we will continue our spending at a sustainable rate alongside our wider objectives for the economy and public services. This Budget therefore confirms the spending plans set out in last year's comprehensive spending review, and makes an assumption for continuing real growth in public spending after 2011 at a rate of 1.9 per cent. a year, which will allow departmental resources to continue to grow broadly at the same rate for the next three years.
	I now want to turn to the steps that I believe are necessary to equip this country for the future. There is no greater moral imperative than to make sure that every child has the highest aspiration and ambition and the best possible opportunity to go as far as they have the talent to go—not some children, but every child in this country.
	If we are to build a fairer future for our children, we must eradicate child poverty in Britain. Between 1979 and 1997, the number of children living in poverty doubled. Since then, I can report that 600,000 fewer children live in relative poverty, and we have halved the number of children living in absolute poverty. We have set ourselves an ambitious target to eradicate child poverty by 2020 and to halve it by 2010, and today I want to do more to deliver that ambition.
	I will help families to escape permanently the cycle of deprivation that has blighted too many lives. Central to that is helping more parents into work. We want to demonstrate our commitment to supporting parents through a contract in which the Government undertake to provide the support that families need to move into work, and the other side of this contract is that we look to families to make a commitment to improve their situations where they can.
	From October 2009, we will change the rules for housing and council tax benefit so that parents are better off in work than on benefit. As a result, a family with one child on the lowest income will gain up to £17 a week. This measure alone will lift 150,000 more children out of poverty. And I can do more to help all children of hard-working families.
	In 1997, child benefit for the first child was just £11 a week. I can tell the House that, from April 2009, I will increase child benefit for the first child to £20 a week—a year earlier than planned. I will increase by £50 a year above inflation the child element of the child tax credit for families on low and middle income from April next year. That means that a family with two children earning up to £28,000 a year will be over £130 a year better off. To make further progress, we will spend a further £125 million over the next three years targeting help on those who need it most and where the challenges are the hardest, developing new approaches that help families in the long term. Taken together, these measures mean that even at a time when we need to take difficult decisions we are investing a further £765 million next year and then a further £950 million the following year to take 250,000 more children out of poverty.
	Today I am publishing analysis on what further steps we intend to take to eradicate child poverty, and I believe that further action is also now needed to help vulnerable groups deal with rising energy prices. We want to see the 5 million customers on prepayment meters given a fairer deal and energy companies increase their support to vulnerable customers. We will work with the companies to take forward further action on a voluntary and on a statutory basis to underpin this as necessary and we will legislate when it is necessary to do so. Energy companies currently spend around £50 million a year on social tariffs. I want to see this rising to at least £150 million a year in the period ahead.
	We are committed to helping people who need the help most. We are also committed to encouraging more people to save. There are now over 17 million people with individual savings accounts and, from this April, we are increasing the annual individual savings account investment limit to £7,200, while the amount that can be held in cash will rise to £3,600. Parents have now opened over 2.4 million child trust fund accounts, saving more for their children's future.
	But we can go further. So I can also announce that the Government will launch the savings gateway nationally with the first accounts available from 2010. By contributing to these accounts, we will offer incentives to save to up to 8 million more people on low incomes. Ending child poverty, encouraging saving, raising ambition and providing greater opportunity—that is the objective of this Budget.
	For business, my Budget provides continuing stability and certainty and introduces new opportunities for entrepreneurs and also maintains the three critical factors contributing to the strength of the UK's business environment, ensuring that we remain one of the best places in the world to do business. We will continue to promote open and competitive markets, by removing barriers to trade across the world through bilateral and multilateral trade negotiations, including the conclusion of the Doha development agenda.
	Our goal is, and will continue to be, to maintain the most competitive corporation tax rate of any major economy. We already have the lowest corporation tax rate in the G7 and a competitive and simplified tax regime is essential, which is why we cut the main rate of corporation tax in 1997 and again in 1999. And from next month the main corporation tax rate falls again from 38 per cent. to 28 per cent.
	The UK is one of the best places in the world to do business. We remain committed to consultation with business to maintain a stable business tax regime that remains responsive to business needs and is internationally competitive. Underlining our commitment to maximising the economic recovery of the UK's oil and gas reserves, I can also confirm reforms to the North sea oil fiscal regime to help incentivise investment and support production.
	But today, I want to do more to support small and medium enterprises, now and in the longer term. Thirteen million people work in those enterprises and there are over 750,000 more small and medium firms than there were in 1997. The new capital gains tax regime will come in next month including the entrepreneurs relief that I announced in January. That will benefit over 80,000 businesses and investors in the next year alone: 90 per cent. of them will continue to pay capital gains tax at 10 per cent., one of the lowest rates in the world. This Budget continues a programme of tax simplification. I am today announcing further steps to help small companies simplify their tax calculations.
	Especially at this time, we need to do more to help small and medium enterprises to get access to the finance that they need. To help them in the current conditions, I can therefore announce that funds available through the small firms loan guarantee scheme will be increased by £60 million for the coming year. I am from next month extending the scheme to all small and medium firms. I am also increasing the amount of investment on which tax relief is available under the enterprise investment scheme from £400,000 to £500,000 and the employee share limit for tax relief under the enterprise management incentive scheme will increase from £100,000 to £120,000. The Secretary of State for Business, Enterprise and Regulatory Reform will consult with radical new proposals to impose a limit on the amount of regulation that can be imposed by Whitehall Departments. I will also provide a capital fund of initially £12.5 million specifically to encourage more women entrepreneurs.
	There is also more I can do to ensure that small and medium firms win more business from the public sector, so we will take immediate steps to give firms better access to Government contracts and help them with their cash flow. I am asking Anne Glover, the chief executive of Amadeus Capital Partners, to look into what other barriers we can remove and the practicality of also setting a goal for small and medium enterprises to win 30 per cent. of all public sector business in the next five years. I believe that that could help promote enterprise in one of our most innovative and dynamic areas of the economy. I also believe that we can help support them grow their businesses, which will create new jobs and opportunities.
	We welcome the contribution made by people born outside the UK who choose to come and work here. They are an important and central contributor to our economy's growth and prosperity. They pay their taxes on their earnings here; they also pay tax on the money they bring into this country from abroad. But for those non-domiciled individuals or families who have chosen to make Britain their home, I believe that it is right and fair that they should, after seven years, pay a reasonable charge to maintain the right to be taxed differently from other UK residents. Beyond that, as I have said before, we will not seek to charge UK tax on offshore income or capital gains that are not brought into the UK. This new charge will be implemented from April. There will be no further changes to this regime for the rest of this Parliament or the next.  [Interruption.]
	Last October, I said that I would also consider a scheme that claimed to raise an additional £2.8 billion from people who are non-domiciled. On closer examination, it was clear that the sums that did not add up—not for the first time, given the source from which that representation came—and I rejected it. We will continue, though, to be vigilant against tax avoidance, and we are publishing today further measures to ensure fairness for all taxpayers.
	If we are to compete in the future, it is essential to do even more to drive up standards in education and improve skills. Increased spending on education has benefited children right across the United Kingdom. We have cut the number of underperforming schools dramatically in the last decade and building on last year's spending review will raise standards even further to create greater opportunities for children.
	So the Secretary of State for Children, Schools and Families will be investing £200 million to bring forward by a year to 2011 the Government's aim for no schools to have fewer than 30 per cent. of its pupils achieving five A* to C GCSEs, including English and maths. We will also extend the successful London Challenge model to enable the best head teachers to turn round low-performing schools, to create new trusts and federations around successful schools and, in areas of greatest need, to drive forward a faster expansion of our academies programme. As a result, by 2011, we will ensure that every school is an improving school meeting the standards that we have set.
	I can announce today that we will commit £10 million over the next five years, which, alongside contributions from the Wellcome Trust and private sector, will create a £30 million Enthuse Science fund. That will give every science teacher in secondary and further education access to high-quality professional development, helping to improve the science on offer in today's schools.
	To improve skills, the spending review last year increased the amount of money for adult training. Extra funding will enable nearly 3 million adults to gain new, high-level skills by 2011. Today I can also announce an extra £60 million over the next three years to provide new opportunities for people to gain the skills they need to enter the labour market, to remain in and progress through work. That includes additional apprenticeships with leading employers to help tackle skills gaps and shortages.
	By 2010, we will be spending over £6 billion a year supporting British science and innovation. Tomorrow, the Secretary of State for Innovation, Universities and Skills will publish the science and innovation White paper, which will include proposals for a further education innovation fund to help support businesses to develop their innovative potential.
	If we are to compete in the future, not only do we have to have the best business environment and higher skills levels, but we also need good transport links to make up for decades of under-investment. In the last 10 years, we have doubled the amount of money that we spend on transport—£7 billion on the west coast main line to cut journey times—and public transport usage is at a 25-year high.
	Last November, following the Government's investment of £6 billion, we saw the completion of the channel tunnel rail link and the opening of the St. Pancras international station. This week, terminal 5 opens at Heathrow. Today, I can announce new measures at Heathrow and other airports to ensure greater use of biometric technology to speed up the time that it takes passengers to get through immigration control. Government funding for Crossrail is now secure and that will support economic growth not just in London but in the whole of the United Kingdom by adding an estimated £20 billion to national income. That will help London retain its position as the world's pre-eminent international financial centre.
	We are spending more on public transport, and we also need to spend more to reduce congestion and improve transport links. If we are to remain competitive over the next 20 to 30 years, we need to take more radical steps to reduce congestion on our roads. We do need more capacity on the roads, but we cannot build our way out of all the problems we face.
	Last week, the Secretary of State for Transport announced further measures to ease congestion. In addition, she has made available funding to develop local schemes to tackle congestion in the short term. In the longer term, though, road pricing could reduce congestion in the future, as well as helping to meet our wider environmental obligations, so I am setting aside new funding to develop national road pricing, inviting tenders to test road-pricing technology, with the results expected next year.
	Just as we need good transport links, we also need to make sure that we have more housing to meet the rising demand for homes as well as to support our growing economy. Since 1997, as a result of historically low mortgage rates, we have seen 1.5 million more home owners. Already, we have helped 95,000 families into new homes through shared ownership and shared equity schemes. We will now spend £8 billion more on new, affordable and social housing over the next three years. That will enable the Housing Corporation to develop 70,000 new affordable homes each year over the next three years.
	But I want to go further. From this April, key workers, such as teachers and nurses, and first-time buyers will be able to borrow money from new shared equity schemes. Up until now, those were available only to people who could afford three quarters of the price of their new home. I am now extending the scheme to help those able to afford half the price of their new home. I can also announce that, from today, stamp duty on shared ownership homes will not be required until buyers own 80 per cent. of the equity in their home.
	It is precisely at this time that we need to do more to promote longer-term stability for home owners and mortgage holders. Already, the reforms we have introduced have created much greater stability with consistently low mortgage rates for home owners. However, the uncertainty in the financial markets is having an impact on mortgage lenders here in the UK, so I want to take measures that will keep mortgage rates low and stable.
	In 2006, 30 per cent. of mortgages agreed in the UK—£100 billion of lending—were funded through secondary funding markets. Current conditions in these mortgage markets are extremely difficult because of the financial turbulence in global markets. In some countries, those markets are closed. It is, however, imperative that lenders have access to stable and low-cost funding so that mortgage rates can come down as soon as possible. We want to bring together investors and lenders with the Treasury, the Bank and the Financial Services Authority to find market-led solutions to strengthen these funding markets further.
	I also want more people to have the choice of a long-term fixed mortgage. These protect borrowers from risks and allow them the flexibility to move and to get a new mortgage if rates go down. Today, however, most people in the UK have short-term fixed-rate mortgages for two or three years, leaving them exposed to interest rate rises when their mortgage deal ends. That is not the case in other countries—Denmark, for example—where the majority of home owners take out long-term fixed-rate mortgages. I want to see more flexible and affordable long-term fixed-rate mortgages for 10, 20 or 25 years.
	I am today publishing the findings of a review of housing finance in the UK. The conclusions show that long-term fixed-rate mortgages can reduce some of the risks of taking out a mortgage, especially for first-time buyers and lower-income families, and this will help more people get on to and stay on the housing ladder. So I want to seek views on how we can deliver—drawing on international experience—the right framework for the UK to achieve long-term fixed-rate mortgages, and I will report back in the pre-Budget report.
	The best way to improve long-term affordability and stability is to build more houses, which is why we are committed to building more homes by 2020. So I can announce that in addition to the 40,000 already under construction, we have, through the review of public sector land, identified sites for 70,000 more houses.
	We are determined to take decisions now for the long-term future of our country, helping to improve affordability, supporting long-term stability for home owners, and meeting the needs of future generations, and our greatest obligation to the future must be to tackle climate change. Britain has been at the forefront of international action. We are one of the few countries to meet our Kyoto target. We are working with other countries following agreement in Bali last year to agree tougher global goals after 2012, and the UK will use our £800 million environment fund to work with the United States, Japan and other countries, as well as the World Bank, to fund clean technologies in developing countries and adaptation to climate change.
	We are already the leading financial centre for carbon markets, and we are also working with California and other American states to build these markets and strengthen partnerships. We need to do more and we need to do it now, though. Few doubt the science. The need to take action is urgent; the effects if we do not will be catastrophic.
	Recognising this threat, we are the first Government anywhere in the world to introduce legal targets compelling us to take action to cut carbon emissions. We have established a target to reduce emissions by at least 60 per cent. by 2050, but I believe that we should go further. That is why we have asked the committee on climate change to advise us on whether, as part of an international commitment, we should raise our target not to 60 per cent. but to 80 per cent. And if we are serious about reaching demanding targets, every Government, every Department in Government, every single public sector body, every business, every one of us needs to play our part. To ensure that carbon reduction is a central part of our economic objectives, I can tell the House that the first carbon budgets to 2022 will be announced alongside the Budget next year.
	Long-term growth must be sustainable. There are huge opportunities there too for businesses, and there could be over a million jobs in our environmental industries within the next two decades. Meeting these long-term challenges will require us to make substantial reductions in emissions across the economy, in energy supply, in transport and in our business and our homes. But I believe there are three key steps that we can take now.
	First, working within Europe we have helped to build the emissions trading scheme to curb the amount of carbon produced by generators and large industrial users. The scheme imposes a cap on the amount of carbon that companies can generate. Companies get allocations for credits to help them to adapt. But if we want to encourage investment in low-carbon technology, in energy renewables and in nuclear, for example, and if we want to make the industry more carbon-efficient, we need to go further. So in the next phase, instead of auctioning of just 7 per cent., I want to see auctioning of 100 per cent. of these allowances for electricity generators. Last year's energy White Paper committed us to increasing the supply of renewable energy, and the Energy Bill now going through Parliament will allow us to triple renewable energy by 2015. We will consult on how to meet our share of the European Union target in the summer.
	Secondly, we need to do more to reduce the amount of carbon generated at home and at work. Given the damage that single-use carrier bags inflict on the environment, we want to be able to take action now, so we will introduce legislation to impose a charge on them if we have not seen sufficient progress on a voluntary basis. Legislation will come in in 2009, and on the basis of other countries' experience it could lead to a 90 per cent. reduction, with around 12 billion fewer plastic bags in circulation. The money raised should go to environmental charities.
	Next month we will launch the most ambitious household emissions reduction programme. Energy companies are obliged through the carbon emissions reduction target to give their customers better deals for energy efficiency and therefore cut bills. This means cavity wall insulation for nearly 3 million homes, loft insulation and more energy-efficient appliances. I can announce funding of £26 million next year for a Green Homes service to help people cut their carbon emissions and their fuel bills. We will also extend the use of smart meters to medium and large companies over the next five years to provide them with greater incentives to reduce the amount of energy that they consume.
	We already have a target to make new homes zero-carbon from 2016. I believe that we need to go further, and I can announce today that new non-domestic buildings will become zero-carbon by 2019. We will consult on achieving that target, with the potential to achieve 75 million tonnes of carbon dioxide over the next 30 years. The climate change levy, which is the main reason why we have met our Kyoto targets and which is still opposed by the Conservative party, will increase in line with inflation from April.
	I believe that the third key area in which we need to take action now is transport, which accounts for nearly a third of our carbon emissions. We recognise the contribution of aviation to the UK economy, which is why we support expansion at Stansted and Heathrow, but I have always been clear that aviation must meet its environmental costs, and that is why we want it to be in the European Union emissions trading scheme. Because emissions from aircraft are forecast to continue to grow, I am also announcing that revenue from the duty will be increased by 10 per cent. in the second year of operation. But Britain's 30 million cars, vans and lorries together account for 22 per cent. of total carbon emissions. Over the last 20 years new cars have become 50 per cent. more efficient, and new technology will bring further improvement.
	Today I am publishing Professor Julia King's review of low-carbon cars, in which she examined new technologies which could help to cut carbon emissions further. Professor King found that simply by switching to the cleanest cars on offer, motorists could save 25 per cent. of their fuel costs. She also found that manufacturers needed to be encouraged to bring new technology to the market. I am asking the European Commission today to set a tighter target which reduces the cap on emissions from 130 g per km to 100 g per km by 2020.
	But I believe that the road tax system should do more to support the use of more carbon-efficiency, and therefore less costly cars. It will continue to reduce the average carbon dioxide levels in new cars. First, I propose a major reform of vehicle excise duty from 2009 to encourage manufacturers to produce cleaner cars with the introduction of new bands. There will be an incentive to encourage drivers to choose the least polluting car.
	As a second stage for new cars, from 2010 there will be a new first-year rate based on carbon dioxide emissions from the car. Cars that emit less than the proposed 130 g European standard will pay no car tax at all in the first year, but a higher first-year rate will be introduced for the most polluting cars. Cutting taxes for those who cut carbon emissions; but it is right that if people choose to buy a more polluting car, they should pay more in the first year to reflect the environmental cost. These changes will provide a real incentive for both manufacturers and motorists.
	We must encourage sustainable biofuels, and therefore the biofuel duty differential will be replaced by the renewable transport fuel obligation. I am also reforming capital allowances for business cars to increase the incentive to move to lower-emitting cars.
	Today is No Smoking day, and from 6 pm the duty on tobacco will rise, adding 11p to the price of a packet of 20 cigarettes and 4p to the price of five cigars. To help people stop smoking, we are continuing the 5 per cent. reduced rate of VAT on smoking cessation products beyond 30 June this year.
	Mr. Deputy Speaker, as incomes have risen, alcohol has become more affordable. In 1997 the average bottle of wine bought in a supermarket cost £4.45 in today's prices; if you into a supermarket today, the average bottle of wine will cost about £4. So from midnight on Sunday, alcohol duty will increase by 6 per cent. above the rate of inflation. Beer will rise by 4p a pint, cider by 3p a litre, wine by 14p a bottle and spirits by 55p a bottle, and those duties will increase by 2 per cent. above the rate of inflation in each of the next four years.
	It is only because I have taken these decisions on alcohol and on closing tax loopholes that I am able to provide additional support for families and lift more children out of poverty. It is also why I am able to make two further announcements, while still meeting our fiscal rules. As the House will know, the basic rate of income tax will fall by 2p in April. Because charities have a vital role to play, we will therefore implement a transitional rate of 22 per cent. to allow them to continue to claim gift aid at the current rate, delivering £300 million-worth of relief. It will provide charities with certainty for the next three years.
	I also said that one of the key features of this Budget is fairness and I want to do more to help older people, especially this year. We are spending £11 billion more in real terms per year on pensions, with over half this extra money going to pensioners on the lowest incomes. From April, as a result of the changes we made last year, a further 600,000 pensioners will be taken out of paying income tax. The pension credit now guarantees a minimum income of £124 a week from April.
	Before 1997, there was no winter fuel allowance. For this year, I have decided to help pensioners who are facing pressures such as high energy bills, so I intend to raise the winter fuel payment for the over-60s from £200 to £250 and for the over-80s from £300 to £400. Nine million pensioner households will be better off.
	This is a responsible Budget to secure Britain's stability in the face of global uncertainty. I have made my choice: responsible decisions, not irresponsible, unfunded promises; fairness and opportunity for everyone in Britain to secure a strong and sustainable future. I commend this Budget to the House.

PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,
	That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
	(a) Rates of duty on alcoholic liquor (motion No. 8);
	(b) Rates of tobacco products duty (motion No. 9);
	(c) Rates of vehicle excise duty (motion No. 13);
	(d) Amusement machine licence duty (motion No. 18); and
	(e) Alternative property finance (motion No. 55). — [Mr. Darling.]
	 put forthwith, pursuant to Standing Order No. 51 (Ways and means motions), and agreed to.

Mr. Deputy Speaker: I now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the law". It is on that motion that the debate will take place today and on the succeeding days. The remaining motions will be taken at the end of the budget debate, next week.

Budget Resolutions

AMENDMENT OF THE LAW

Motion made, and Question proposed,
	(1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
	(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
	(a) for zero-rating or exempting a supply, acquisition or importation,
	(b) for refunding an amount of tax,
	(c) for any relief, other than a relief that—
	(i) so far as it is applicable to goods, applies to goods of every description, and
	(ii) so far as it is applicable to services, applies to services of every description.— [Mr. Darling.]

David Cameron: It is not difficult to see what is wrong with the Budget. It is not just that it was, on the whole, a dire list of reviews and re-announcements delivered with all the excitement of someone reading out a telephone directory, although that did not help. But people watching this Budget for the last hour will conclude that the Chancellor and the Prime Minister live in an entirely different world from everybody else. Every time people refinance their mortgage, it is costing them more. Every time they fill up their car, they are paying more. Every time they shop, food bills are higher. Yet every time they get a tax bill, they are paying more. There was no recognition of that in the Budget. The cost of living is going up and Labour is making it worse. Everybody has now learned the cost of living under Labour.
	Everybody listening to the Budget will have noticed something else. This Government and the Prime Minister took all of the credit when the global economy was growing, but now there are difficulties, they will not take any of the blame. Here are some of the things that they would not tell us in the Budget. The Chancellor boasted about trade, but he did not tell us that the current account deficit is set to rise to a record £72 billion. That was on page 165 of the Red Book. He told us about investment, but he did not tell us that the rate of growth of business investment is slumping by two thirds. That is on page 163 of the Red Book. He talked about debt as a share of GDP and boasted about his rules, but if we include Northern Rock, debt as a share of GDP is 43.8 per cent., busting his fiscal rule.
	The Chancellor made one central claim at the heart of his Budget: he told us that Britain is well prepared for economic slowdown. I have to tell him that he is absolutely wrong. As this country enters troubled times, it could hardly be worse prepared. We have the highest tax burden in our history.

Edward Balls: So weak!

David Cameron: "So what?" says the Secretary of State for Children, Schools and Families. I know he wants to be Chancellor so badly it hurts. I have to tell him that another Budget like the one we have just heard and he will not have to wait very long.
	We have the highest Budget deficit in western Europe. Today, the Chancellor told us that borrowing would be up by £20 billion over the next four years. Those are truly dreadful figures; there is a £7 billion increase in the next year alone. We have the highest interest rates in the G7, which means that on top of high taxes, home owners and businesses have a higher interest rate burden, too. Today, for the second time in his very short period as Chancellor, he downgraded his growth forecast once again—not that he could bring himself to use that word.
	High debt, high interest rates, high taxes and now lower growth—those are the facts that this Budget cannot hide. They tell the story of just how badly prepared we are for the downturn. We all know why; because in the years of plenty, Labour Governments put nothing aside. They did not fix the roof when the sun was shining. What better metaphor could there be today, when it has started to blow off at No. 11 Downing street?
	What we needed in the Budget was real leadership and a serious plan to get this country out of the mess that they have made. We need a Government who help people when times are tough; instead, we have a Government who kick them when they are down. The key test of competence for any Government is not how they perform when things are going well, but how well prepared they are to cope when things get tough. The key question at these times is how much room for manoeuvre one has given oneself. The answer with the Government is, "No room for manoeuvre at all."
	In America, they are cutting taxes by 1 per cent of national income. In Sweden, there is a 2 per cent budget surplus to help them out.  [ Interruption. ] I am not surprised that hon. Members do not want to hear the consequences of the waste and incompetence of the last decade with their Prime Minister. In other countries, they are debating what to do with their surpluses. In this country, there is no debate because there is no surplus. In Britain, we have nothing—no room for manoeuvre on the deficit, no room for manoeuvre on interest rates and no room for manoeuvre on taxes. I want to take each of those in turn.
	On debt, the Government said that they would borrow £47 billion over the last five years. In fact, they have borrowed £165 billion—over £100 billion more debt than planned. Today, it is worse again. They have told us that the current Budget deficit is up another £23 billion over four years. That is the extent of the Government's economic incompetence.
	This Chancellor, just like the last one, likes to read out the league tables. Let me read a list of major countries with deficits higher than Britain: Hungary, Pakistan and Egypt. That is the league of debt to which we have been relegated today. For years the Prime Minister and the Chancellor liked to tell us about their fiscal rules and how they would stop us getting into this kind of mess. The Chancellor tried today, and I do not know how he did it with a straight face. The truth is that they have forgotten the most important rule of all: in good years you put money aside for bad years, because you cannot spend money that you have not got.
	We are ill-prepared on fiscal policy; let us look at monetary policy. Again there is virtually no room for manoeuvre. The Chancellor boasted about low inflation, but let us listen to what the Governor of the Bank of England expects. He predicts
	"inflation rising sharply alongside a marked slowing in growth",
	and it says on page 139 of the Red Book that inflation—on whichever measure we take—is higher now than in May 1997. That is why the Bank of England has the highest interest rates in the G7. But the situation is in fact worse than that. Let us look at the real figures for inflation. Food inflation: 7 per cent. Housing costs: up 8 per cent. Petrol and oil: up 19 per cent. That is the real inflation paid by families in Britain.
	If anybody still needs proof of how little room for manoeuvre the Chancellor has, they should just take a look at what is happening to taxes. While our competitors are cutting taxes on enterprise, the Chancellor confirmed today that he is putting such taxes up. Capital gains tax: up by £700 million when we are heading for a downturn. Taxes on family businesses: up by £200 million—that is the new income-shifting rules for family businesses that he did not even mention in his speech. Corporation tax on small businesses: up £800 million as we head for a downturn. This is a crazy way to respond to a slowdown—hitting the very people who create the wealth, the jobs and the investment that this country so badly needs.
	However, the true extent of the Chancellor's dreadful predicament is the fact that the Budget— [Interruption.] I am going to mention something that last year was the centrepiece of the tax-con Budget, but which this year does not get even a single mention. He is abolishing the 10p starting rate of tax. That is the tax con that Labour Members all cheered so loudly last year, and soon they will find out what it means. Low-paid NHS workers will have to pay more tax. Part-time teaching assistants will have to pay more tax.  [Interruption.] Is the Prime Minister shaking his head? Well, that is the Budget that he introduced. Our soldiers fighting in the heat and dust of Afghanistan will pay more tax. That is the consequence of the tax con.  [Interruption.] Labour Members say, "Shame"; well, they should be ashamed for taxing our soldiers more. The fact is that 5.3 million of the lowest paid will be worse off, and what have the Government got to say to them? They say, "If you fill in a form, some of you can get some of the money back." Taking away people's money, reducing self-reliance and increasing people's dependence on the state: that tells us everything we need to know about this Prime Minister and this Chancellor.
	Let me explain what we would do differently. We would ensure that higher green taxes were paid into a family fund and were used to cut taxes on all Britain's hard-pressed families. We would help business by sweeping away the allowances and reliefs and cutting the headline rate of corporation tax. We would target tax on binge drinkers, not on every responsible drinker in this country who wants a glass of wine or a pint of beer at the end of a hard day's work.
	What was the most important thing the Chancellor should have done in this Budget? He should have set a long-term strategy for economic policy that learns the lessons of the waste and extravagance of the last decade. He should have set out how to share the proceeds of growth so we could get borrowing and tax rates down. That would help not only Britain's families, but Britain's businesses, too.
	Business knows just how bad this situation is. The CBI says it is now like a "banana republic".  [Interruption.] Those are its words; that is the effect of the prawn cocktail offensive of all those years ago. The British Chambers of Commerce says the Government have "lost the plot". Nine in 10 small businesses have lost confidence in the Government. Business has fallen out of love with Labour. The very least businesses expected was competent leadership in uncertain times, but all they have got is dithering.
	Five months ago, the Chancellor stood at the Dispatch Box and proposed changes to capital gains tax; all the Labour Members cheered, and the policy fell apart. Five months ago, he announced his plans on non-doms; they all cheered, and the policy fell apart. Month after month, the Government said they did not want to nationalise Northern Rock, and they did. They cancelled the general election, which, unbelievably, they had planned to fight on the issue of competence, and they promptly lost half the country's personal data in the post.
	Who is to blame for this? It is tempting to blame the Chancellor; after all, he has had the most disastrous start of any Chancellor in modern history. But I do not think that would be fair. Let us be in no doubt as to the real source of this Government's problems. Ask any question about this Budget, and the answer comes back to one man: the Prime Minister. Why is the Chancellor hitting the low-paid with higher tax? Because his predecessor put it in his Budget last year. Why is the Chancellor left with the biggest Budget deficit in western Europe? Because the Prime Minister spent all the money in the last 11 Budgets. Why is the Chancellor imposing £1 billion in extra taxes on capital gains and family businesses? Because the Prime Minister got himself in a panic trying to copy our proposals on inheritance tax. This country should not be in any doubt about the source of the difficulties that Britain is now in: the Chancellor was put in a hole by the Prime Minister and they both kept digging.
	What is the situation now? We have the highest taxes in history, the highest deficit in western Europe, the highest interest rates in the G7— [Interruption.] I thank the Secretary of State for Children, Schools and Families for his comment; I know he is Minister for children, but he does not have to behave like one. We have all of that, and the Government are asking us to trust them to get the country out of this mess. They just do not get it. The City may be having a credit crunch, but this Government have a credibility crunch. The Treasury has run out of money, and they have left Britain running on empty.
	All over this country, people are asking questions: "I am paying more tax, so why is my post office closing?" and "I am paying more tax, so why is my maternity unit closing?" and "I am paying more tax, so why do I see so much waste and incompetence?" The answer is sitting opposite me. Never has so much money been raised in taxes spent and wasted. Never again should we be so unprepared for a world downturn. Never again should there be so little room for manoeuvre when things get tough. This Budget shows the whole country the cost of living under Labour, and everyone will conclude that the Prime Minister, who got us into this mess, cannot possibly be the person to get us out of it.

Nicholas Clegg: I am told that during the Government's previous 10 Budgets Prime Minster Blair did not know what the proposals would be until Chancellor Brown rose to his feet in the Chamber. This time, the situation is exactly the other way round: the Chancellor is the Prime Minister's creature, struggling to clear up a mess left by his boss under instruction from No. 10. What we have seen today is an act of political ventriloquism. I would like to compliment the Prime Minister: I watched him very closely, and his lips barely moved all the while that the Chancellor was speaking.
	This Budget has inevitably brought a lot of bad news. It has also massively over-egged and exaggerated any good news. Why, for instance, did the Chancellor not admit in his statement that the winter fuel allowance increases are a one-off? How can he bring himself to play with the hopes and expectations of some of the oldest and most vulnerable people in our society? Is this just another pre-election bribe? Are we now to expect an election in 2009?
	There are tough times ahead, of course, and the world economy remains uncertain, so this was an opportunity to give whatever help possible to the millions of hard-pressed families who are feeling the pinch—whose money simply does not stretch as far as it once did—but the Chancellor has not delivered such a Budget. This is a meagre, tinkering Budget, which gives precious little help to the poor but maintains special treatment for the rich. It is a Budget designed to fill a black hole, masquerading as good for the environment. It is a Budget that will not make Britain fairer. It is a Budget that is a green cop-out.
	The Chancellor bravely suggests that the problems afflicting our economy were all caused elsewhere. He has to do that; he cannot tell the truth. He cannot blame his boss; a monkey never blames the organ grinder. It is deeply disingenuous to claim, as he did, that a housing market crash in the United States is the main reason for our economic woes. The reality is that a swelling tide of personal, private debt secured against high house prices that are now declining is creating the conditions for a perfect economic storm. High oil and food prices make it difficult for the Bank of England to cut interest rates, and with Britain now up to £2 trillion in debt, the Chancellor has backed himself into a corner with no room for manoeuvre. The sustainable debt rule is in tatters, even without Northern Rock and private finance initiative projects being put on to the national accounts, and the "golden rule" has become the "gamblers rule". Deep in the red, the Government keep betting more and more of our money in the hope that someday, somehow, they will find themselves back in the black. As we have heard today, that prospect is moving ever further into the distance.
	We heard much today about the Chancellor's wish to cut child poverty, but the meagre, piecemeal reforms that he is introducing to the chaotic tax credit system will not get the Government anywhere near meeting their 2010 child poverty target. By my reckoning, only about a third of what is needed is being provided; the ridiculously complex set of proposals that we have heard about today will be difficult for the most hard-pressed families to understand. Using the Government's own calculations, the Chancellor would have to find an additional £3.5 billion to stand even a faint chance of achieving their goal, and they are nowhere near doing that. The reality is that this Government's approach to child poverty has failed. If we are to abolish child poverty for good, we must increase not only income but opportunity. We must target more investment to help the poorest children in our schools and offer them genuine opportunity for life. Crucially, we must deal with the link between poor housing and persistent poverty.
	This Budget was widely trailed by the Treasury as the greenest ever, but at the first sign of political difficulty the Government have run away, by postponing the petrol duty increase until October. The fact is that the real cost of motoring has fallen consistently over the past two decades while the real cost of public transport has risen by a third. We of course welcome the Government's increasing vehicle excise duty on the most polluting cars. Like many of the Treasury's best proposals—nationalising Northern Rock, reforming aviation tax and increasing stamp duty thresholds—that started life as a Liberal Democrat policy. We have got used to the fact that a while after we have a good idea, the Treasury, too, finally gets round to realising it is the best way forward.
	Green taxes should be revenue-neutral. They should not be treated as a wheeze to squeeze ever more money out of the British people, but should instead be designed to encourage green behaviour and cut the taxes of the most needy. By my reckoning, the figures that we have heard today will mean that the Government will be taking approximately £1.7 billion in new green taxes, but less than £1 billion of that will be spent on the poor. Much of the revenue from those green taxes, plus other duties, will clearly go straight back into the black hole that the Prime Minister and the Chancellor have created in the UK's finances. By 2010, an additional £1.9 billion will go straight to filling that black hole. This is not a Budget for the environment; it is a Budget driven by fiscal incompetence and political desperation.
	Is it not the case that the only people who will welcome this Budget are those at the top of the income scale, not those at the bottom? The Government's policy on non-doms is laughable. Their new poll tax, which the Conservatives unsurprisingly support, will be wildly punitive for ordinary foreign workers, but it will be no more than a flea-bite for foreign billionaires, who have come to regard the United Kingdom as nothing more than a tax haven.
	The Government's approach to capital gains tax policy continues to be mired in chaos. It is frankly amazing that the Chancellor has contrived to create a tax change that has caused howls of anguish from businesses and cries of derision from commentators but still allows hedge fund managers to pay lower rates of tax than their cleaners. Surely it would make more sense to return to the capital gains tax system of Nigel Lawson—not a man with whom I readily agree—and tax capital like income. Until the two taxes are united, we will continue to see mass tax avoidance by the wealthy, presenting their income as capital for a 23 per cent. tax break. Surely this is also the time to take a much wider look at tax avoidance by big business. It is scandalous that companies such as Tesco avoid paying millions in stamp duty by placing British properties in foreign special purpose vehicles, which are based in offshore tax havens.
	Finally, the Chancellor's announcement on fuel poverty is, once again, too little, too late. Why has he not had the guts to claw back the huge excess profits made by energy companies thanks to the emissions permits that the Government have given them for free? Some 4.5 million people still live in fuel poverty, but the Government's 2010 fuel poverty target appears to have been conveniently shelved by Ministers. Limiting his measures to prepayment meters and only a modest increase in money for social tariffs does not go nearly far enough. Surely this is the time to compel all energy companies to introduce real, fair, social tariffs for all vulnerable people, not just those on prepayment meters.
	This Budget gives no real help to families struggling with higher food bills, higher energy bills and higher debt repayments. What will this Budget do to help junior nurses, teaching assistants and soldiers serving in Afghanistan? The answer is nothing. What we have got instead is a sequel to last year's Budget, when the Chancellor's predecessor scandalously raised taxes exclusively on people earning less than £18,500 per year who do not get tax credits. What will the Chancellor say to those most vulnerable people when their income goes down in three weeks' time?
	After 11 years in government, Labour has today completed its fiscal fusion with the Tory Party. Both parties believe in the same kind of Budget: the kind of Budget that kowtows to vested interests, but fleeces the average family; the kind of Budget that keeps tax loopholes for the super rich, but closes in mercilessly on single mothers who have been overpaid tax credits; and the kind of Budget that uses green taxes as an excuse to take more money from the kitty of low earners. This is not a green Budget. This is not a people's Budget. This is a tinkering, con-trick Budget that protects the rich and abandons the poor.

John McFall: I welcome the opportunity to speak in the Budget debate. Given the economic instability and turbulence in the markets, I am delighted that the Chancellor referred to the targets on child poverty—a primary target of the 1997 Government—the initiatives on environmental taxation, the savings gateway and the measures for elderly citizens. He did so against a background of economic turbulence and the globalised world in which we live. Indeed, only yesterday the Federal Reserve put $235 billion into the market by providing Treasury securities to the bond market for it to accept as ordinary triple-A-rated mortgages for collateral. That was done to encourage banks to lend to one another.
	We are in the Northern Rock situation because of a failure of the private sector in the United Kingdom. We face the global crisis because of a failure of the private sector in the international system. The Treasury Committee has examined Northern Rock over the past six months, producing a report on "The run on the Rock". Just as importantly, it produced a report a few weeks ago on "Financial Stability and Transparency", pointing the way forward for the Government and the international community. We said that markets need a clear message about the risks that they are taking. We could see that in the Northern Rock fiasco, its board in particular did not appreciate the risks that it was taking. We are thus asking the Financial Services Authority and the Bank of England to ensure every year that their warnings are heeded, and that they come out with two or three main issues for boards to study. The boards should then report back to the FSA and the Bank of England that they have understood those messages.
	I can only describe what we have seen in the markets as a bout of collective madness. How much write-down is taking place at the moment? On the Committee's visit to the United States in December, I was told that we could be talking about $600 billion, but a senior economist at the UBS bank is talking about $1 trillion, and others are coming out with figures of $2 trillion, $3 trillion or $4 trillion. We do not know where we stand at the moment, but there is no doubt that things will get worse. We must remember the globalised background against which events in the United Kingdom are taking place.
	The reason for that situation is that the low inflation and low interest rate environment of the past decade has encouraged a search for yield, which has resulted in complex and opaque products. The designers of those products often do not understand what they are producing. We had the chairman of an investment bank before the Treasury Committee, and when I asked him what a CDO-squared was, he said that he was not there to explain that. If the designers did not understand them, certainly investors did not.

Rob Marris: Tell us.

John McFall: CDOs are collateralised debt obligations, and I shall explain the CDO-squared to my hon. Friend over a cup of tea in the Tea Room if he is interested.
	Investors did not exercise due diligence when considering such products. They equated complexity with security. That has been compounded by the role of the credit rating agencies. All the members of the Committee appreciated that the credit agencies' conflicts of interests need to be sorted out. The agencies are paid by the issuers, which is unacceptable. The Basle II international agreement must be examined, because we need to correct the perverse incentive for companies to meet the capital adequacy requirements by reducing their liquidity. That has to stop. There are both national and international elements to the current situation.

Philip Dunne: Does the Chairman of the Treasury Committee share my disappointment that the Chancellor did not have the courage to refer to Northern Rock on a single occasion in his Budget speech? Given that he has just taken on a potential £100 billion of public debt, surely the Budget provided him with an opportunity to explain how it would be treated in the public accounts.

John McFall: The hon. Gentleman is a very good member of the Treasury Committee, so he knows that we have been studying the matter in depth for six months and made reports to the House. I can only quote a wise old central banker from the City who said to me, "John, there have been no casualties in this. Nobody has lost any money, and the system has been stabilised." The public's response shows that they share that sentiment. I am not surprised that the Chancellor did not mention Northern Rock, because it has been the focus for six months, and arrangements have been put in place.
	I wish to cover a number of matters. The first is economic prospects and forecasts. The second is fiscal policy and fiscal sustainability, and the third is child poverty. I was one of the 72 Members who wrote a letter to a national newspaper last week urging the Chancellor to ensure that the child poverty targets were re-established. The fourth is environmental taxation, the fifth is the savings gateway and the last is rogue trading and insider dealing.
	When considering the economic prospects and forecasts, I am mindful of the globalised, turbulent background. At the time of last year's pre-Budget report, the Treasury's forecast was for economic growth of between 2 per cent. and 2.5 per cent. in 2008, and between 2.5 per cent. and 3 per cent. in 2009. That forecast was prepared when the wider economic situation was far from clear. When the Committee reported on the pre-Budget report last November, we cautioned that there remained a risk that the credit crunch would have a greater economic effect than expected. That has been confirmed today by the downgrading of those economic forecasts. We also observed that the Treasury's optimism that the economy would revert to trend in 2009 was not adequately explained. When the Chancellor and others come before the Committee, we will wish to test whether the new forecasts are realistic.
	I expect the Committee to focus particularly on three areas of risk. First, the Government have been looking for a growth in exports as part of the rebalancing of the economy. The International Monetary Fund is now forecasting US and eurozone growth of well below 2 per cent. for 2008, with world economic growth as a whole at its slowest rate since 2003. If exports are to grow significantly against that backdrop, exports to growing markets, including China, India and the oil-rich countries, will need to increase.
	In some of those markets, the UK has not performed as impressively as some of our European competitors. On a visit to India 18 months ago, the Committee was made aware that the links between the UK and India could be developed. We were convinced that the UK's exports to India could complement what is happening there rather than challenge it. Developments could take place in high technology, and particularly clean coal technology. I would also like to see further developments between the UK and China in that area.
	Secondly, the Committee will consider the fact that the UK's growth in recent years has been fuelled by the prosperity of the financial sector. On an international basis, that sector is the main cause of the current slow-down in the world economy. It is bearing some of the costs of its past exuberance. I believe that the British financial sector remains competitive and innovative, but it is still to be seen whether its relative contribution to the economy will diminish during the current period of consolidation.
	Thirdly, we will consider the dependence of the British economy on wealth and confidence linked to rising house prices, which is well known. In recent years, Treasury forecasters have prided themselves on defying the doom-mongers who have repeatedly forecast a sharp downward adjustment in house prices. There is a risk that house prices will prove less resilient than the Government expect in the face of the credit crunch. I expect that the Committee will explore that matter, and particularly the Chancellor's initiatives in the mortgage market, with our witnesses next week.

Lembit �pik: I am pleased to hear that the Committee will examine that. While doing so, will it examine the related matter of arm's length management organisations? Is the right hon. Gentleman willing to consider the funding arrangements for ALMOs, which look after a large amount of social housing stock? They are concerned about the limitations on how they can borrow money. Would it be reasonable for the Committee to have a little look at ALMOs when they examine the housing market in general?

John McFall: I suggest that the hon. Gentleman do a bit of homework between now and next week and send me a letter, and we will consider the matter in the Committee.
	I turn to fiscal policy and fiscal sustainability. In several reports during the current Parliament, the Committee has argued that the fiscal rules need to be more forward-looking and less dependent on the dating of the economic cycle. Although the fiscal rules have served the Government and the public finances well in the past decade, the Government and others might have focused too much attention on arithmetical arguments about whether the rules have been met, and insufficient attention on underlying issues of fiscal sustainability.
	On the golden rule, the most pertinent question to ask ourselves is not about public borrowing over a notional economic cycle but about the current state of the public finances and the prospects for the near future. With regard to public sector debt, it is clear that performance against the sustainable investment rule will be affected by both the public sector control of Northern Rock and the eventual implementation of international financial reporting standards, which will mean almost all private finance initiative projects appearing on the public sector balance sheet. I expect the Committee to consider in detail the impact of that, and how it is reported. In doing so, we must bear in mind the underlying purpose of the fiscal rules: to set parameters for fiscal sustainability. It remains to be seen whether either accounting changes or the public control of Northern Rock represent a threat to that sustainability.
	On child poverty, I am delighted to note the Chancellor's initiatives, but we must remember that there are still 2.8 million young people in poverty. One big issue that the Treasury Committee has tackled in recent years is financial inclusion. We have produced four reports on it since November 2006, which have stated the need for people to be included in the banking services and financial network. Those who are excluded from that network are largely socially excluded as well.
	Let us not forget that 600,000 children have been taken out of poverty. That is six times the population of my constituency, more than the population of Bristol and two thirds of the size of the population of Glasgow, so the achievement is considerablebut the Treasury Committee was concerned about the idea that the Government might be resiling from their child poverty targets. I am delighted to see today that the Government have stuck to those targets. Some 700,000 more children must be taken out of poverty by 2010 if the Government are to achieve their interim target, and there will be a long way to go by 2020. I can say with confidence that the Committee will examine the Chancellor on that matter in the next few weeks.

Robert Smith: In relation to poverty more widely, will the Chairman of the Select Committee also examine the Government's handling of fuel poverty, which has increased? The Government placed far too much reliance on cheap energy during a period when prices fell because the UK had a temporary surplus of supply, and now that prices are rising, more people are being pushed into fuel poverty. Will his Committee examine Ofgem's advice that the Chancellor should consider whether he can make a one-off gain on the profits made by energy companies as a result of the issue of emissions trading licences, so as to fund a one-off investment in improving people's housing, so that they can reduce their fuel bills?

John McFall: The hon. Gentleman makes an important point. I believe that he is a member of the Select Committee on Trade and Industry

Robert Smith: indicated dissent.

John McFall: The hon. Gentleman was a member of that Committee the last time we spoke, but he has left it now. I forgot the turbulence on the Liberal Benches.
	The Treasury Committee will be happy to look at those matters. Fuel poverty is defined as individuals spending more than 10 per cent. of their income on energy. Some 4.5 million people, including 2 million pensioners, suffer from fuel poverty, so it is an important matter. However, I am delighted to welcome the Chancellor's initiative on the winter fuel allowance, which is to increase from 200 to 250 for our elderly constituents, and from 300 to 400 for the over-80s.

Sammy Wilson: Does the right hon. Gentleman accept that for many pensioners, some of whom have a small private pension, who now face the loss of the 10 per cent. income tax band, the extra money made available for this year's winter fuel payment will be more than offset by the tax loss?

John McFall: I know that personally, the hon. Gentleman is a bright and optimistic individual, but politically he is always pretty gloomy. I look at the glass as half full today, and I welcome the increased winter fuel allowance. I challenge the hon. Gentleman to go knock on his constituents' doors and ask them whether they want that allowance to be taken away; I reckon he will get a raspberry in response. We should welcome that good initiative.
	On environmental taxation, when the Treasury Committee reported on climate change and the Stern review last month, we expressed disappointment that the Government's commitment to the 1997 statement of intent on environmental taxation had not been maintained. The Treasury has used a different definition of environmental tax from the one used by the Office for National Statistics; the Treasury definition, which excludes energy taxes and taxes on transport, is, in my opinion, too narrow. I do not believe that tax measures are the only, or even the best, way to tackle climate change at national level, but the Treasury cannot continue to hide behind definitions to defend its caution in moving to a position where environmental taxes more accurately reflect the environmental damage associated with certain activities. In that context, I welcome moves to replace air passenger duty with a per-plane duty, as well as the other measures announced.
	The Chancellor mentioned the savings gateway, on which the Treasury Committee has focused in the past. Indeed, last October we published a report that emphasised the importance of secure short-term savings to the financial well-being of the least well-off. We examined the success of savings gateway pilot projects, where private contributions are matched by Exchequer support. In our report, we stated that the national savings gateway
	could achieve some of the Government's aims of promoting saving among low-income groups
	where it encourages
	genuinely new savers and new saving.
	We noted:
	It can bring some individuals into contact with mainstream financial institutions for the first time,
	thereby starting
	a savings habit which continues even when the incentive of Government matching is no longer available.
	Such a scheme can certainly have a positive effect on participants' attitudes to saving. Professor Elaine Kempson, who undertook the survey of the first savings gateway pilot project, made the point that matching strongly encouraged people on low incomes to save. I suggest that the Chancellor and others consider going further. The Institute for Public Policy Research has provided estimates of the first-year cost of a national savings gateway scheme. The IPPR assumes eligibility criteria based on those for working tax credit and qualifying benefits for those out of work, and individual contributions averaging 16 per month. On that basis, it estimates that the first-year costs of a scheme taken up by 50 per cent. of the eligible population, with Government matching of 50p for every pound invested, and pound-for- pound matching for the first two months, would be 249 million. In contrast, the Government estimates that individual savings account and personal equity plan savings are supported by 2.1 billion in tax relief each year, and employee tax reliefs for pension contributions have been valued at 5.3 billion. Expenditure of 249 million pales into insignificance next to the support given to ISAs and tax relief on pensions. I welcome the Government's initiative, but I urge them to go further to encourage more low-income people into the financial network.
	My last theme is rogue trading and insider dealing. I note in today's press that the Financial Services Authority has taken action on rogue trading. We certainly want no repeat here of the Socit Gnrale incident, or of the Barings scandal involving Nick Leeson in the 1990s. Rogue trading remains a big problem, and I want the Government to support the FSA in its efforts, but I also want them to support the FSA on insider dealing. There is no doubt that insider dealing goes on regularly; I am told that by City executives. However, very little is done to bring people to court or to get to the bottom of such incidents.
	An important foundation of the City's reputation is the quality of its markets and the authorities' determination to investigate and prosecute insider dealing. In that context, I endorse the FSA's view that it should be given powers to confer statutory immunity from prosecution or otherwise encourage people to come forward to give evidence against the criminals who commit insider dealing. The FSA has civil and criminal powers to tackle such market abuse, but sometimes there are real challenges in securing the evidence necessary to prove that the offence has been committed. It is in the nature of the offence that there is seldom a smoking gun. Legislative change to enable the FSA to confer immunity would send a clear message to those who contemplate insider dealing: they should know that the FSA has the fullest range of tools to bring them to justice.

Rob Marris: I welcome my right hon. Friend's comments, because when I considered that matter 18 months or two years ago, I found that the track record of the Serious Fraud Office and the Financial Services Authority on insider dealing was absolutely shockingnot a handful of cases had they prosecuted. What is needed is not only legislative change, but for those bodies to use the powers that they already have. They should also examine how such powers are used in the United States of America, where the authorities have a very different and far more successful way of proceeding on such charges.

John McFall: Exactly. When we compare what happens in the US with what has happened in the City, we see that the UK is a soft touch in that respect. Our record is abysmal. I want the Government to consider that, paying regard to what has been going on in the United States, and the FSA's desire to ensure that the City's reputation is cleaner, and is kept clean. They should also give the FSA the powers that other bodies have.

Rob Marris: You should visit America.

John McFall: We did visit America, and it is on the basis of that experience that I make my point. Those taking part in insider dealing should be aware that others who know of their criminality may turn against them. We need the Government to give the FSA those powers.

Mark Durkan: Does the Chairman of the Select Committee not accept that if we simply allow people to come forward and get immunity, without introducing the other measures to which hon. Members have referred, it would lead to a situation in which there were super-rich supergrasses? That would be a public scandal.

John McFall: I know where my hon. Friend is coming from, but the FSA and others have a legitimate point. As I say, people should be aware that others who know about their criminality may turn against them, because we are making no progress at all on the issue. Something needs to be done, and the Government need to consider the issue urgently. I encourage them to ensure that the powers available to other prosecutors are extended to the FSA, and to make progress with the work of considering in which cases a plea-bargaining, or plea-discussion, framework would be of benefit to all prosecutors, including the FSA.
	As I have said, I welcome the Budget. I welcome the stability, as the next 12 months or so will be difficult for all of us, because we live in a globalised world. We do not need any fancy initiatives; we need to hunker down to get through the next 12 months. I am delighted, in an economic sense, that the Government are doing that while paying due regard to social obligations such as the need to tackle child poverty and the problems that people are experiencing with fuel. I welcome the Government's initiatives, and I look forward to the Chancellor and his colleagues appearing before the Treasury Committee in the next seven days or so.

Jacqui Lait: My impression of the Budget is overwhelmingly one of boredom. It was illuminating to look around the Chamber and see the number of people who were nodding off. It was predicted that it would be a boring Budget, and it most certainly was. It will probably be remembered as the carrier bag Budget, rather than as any other kind of Budget. If that is to be the Chancellor's main claim to fame, I suspect that he will not be in his job for very long.
	It was striking that in the midst of the anodyne messages that the Chancellor poured out in order to send us all to sleep there was little reference to Northern Rock and the issues that it has created for the British economy, and little reference to the problem that the world economy faces. I sincerely hope that we are not facing the sort of economic downturn that I remember from 1974, when the stock market fell to some 120 points, which seems unbelievable in this day and age. It may seem odd for a Conservative to quote JK Galbraith, but a close analysis of his book on the great crash of 1929 shows the similarities between the situation that the world economy is facing, and the factors that contributed so greatly to the world crash in '29. That crash was based on pyramid selling of investment trusts, and we now face the prospect of pyramid selling of derivatives in an attempt to defy risk, but of course when one attempts to defy risk, it is spread more widely.
	When risk finally comes into the equationas it inevitably does, because nothing is risk freethe potential for collapse is much more calamitous. We are on the cusp of witnessing such a collapse as the various derivatives that have been developed in the past few years unwind through the system. My understanding is that banks across the world have lost 10 per cent. of their capital base. It is an indication of the severity of the problem that the central banks have fed so much money into the system, just a few months after they last did so. The expectation is that for some weeks, or perhaps months, there may be some loosening in the international credit market, but as the underlying problems are severe, and as unwinding has not yet been completed, we are seeing the same situation being created for a third time in a year. If we prop up a market that is in denial about risk, those concerned will not learn their lesson, and the same pattern of behaviour will be repeated. However, if they are allowed to confront their actions and take responsibility for them, we will see the sort of scenario that we saw in 1929. I should say that I did not see what happened in 1929; I read about it. However, I did witness the crunch in 1974, and that was fingertip.

Ken Purchase: I thank the hon. Lady very much for the history lesson about 1929 and Galbraith's treatise on the subject. Would she say that there will be a market correction in the near future, or will we have to adopt far more Galbraithian responses to the current crisis?

Jacqui Lait: I know exactly what the hon. Gentleman is getting at, but I suspect that if the central banks continue to pump liquidity into the market, it will not cure the problem. The potential consequences are terrifying.

John McFall: Regarding 1929, I am reminded of the remarks of Judge Pecora, who undertook the commission of inquiry. He said that if the financiers had repeated to themselves time and again that two and two add up to four, they would not have got into the mess that they did. Does the hon. Lady see parallels with that situation today?

Jacqui Lait: I think that I have already said that that is the potential problem that we face. As a Scot, I have to say that the investment trust vehicle that caused so much of the '29 problem was of course invented in Scotland, but there it was managed by, dare I say it, dour Scots. It was transported to the States and was then leveraged; that was the problem. That is precisely what has happened with the risks that have been leveraged into various derivatives. I have real concerns that if the central banks keep pumping money into the market, we will not unwind the derivatives, and this generation of financiers will not learn the lesson of risk.
	We cannot defeat risk, and one of my criticisms, as a Conservative, is that the whole thrust of what the Government have done since 1997 is to try to deny that risk exists, and that is a very dangerous thing to do. Year after year, the Prime Minister, when he was Chancellor, would say, I have abolished boom and bust. We are potentially about to have another bust. We are certainly on a downturn. That causes me more concern than anything else. It is my overriding concern about the Budget, because no preparations are being made to deal with the worst-case scenario.
	The Treasury is in denial. It has to be in denial; it has no money. Where the 10 billion from the Bank of England has come from, I can only guess. Is it printing money? If so, we have inflation. Is it borrowing it from the Arab states, which are raising so much money as a result of petrol prices? If so, the money has to be paid back. At some point, the latitude that we allow ourselves with regard to money will catch up with us. I have serious concerns about the fact that no preparations are being made in the Treasury to deal with the situation; the Budget tinkers round the edges.
	As for the green taxes, interestingly, it is proposed that tuppence be put on fuel in six months' time. It is not until 2010, if I read the statement correctly, that we will get p per litrenot per year, but per litre [Interruption.] I stand correctedp above the index, but that is still as a means of dealing with carbon emissions, and is not a significant change.
	Taxes are being raised, but we see no offset for the coping classes, the people who have been hit for so long by the Government, with the increase in taxes being piled on top of them, along with, as my right hon. Friend the Member for Witney (Mr. Cameron), who responded on behalf of the Conservative party, said, all the extra costs that are coming with higher inflation, higher food prices and all the extra pressures on those people, who are keeping the economy afloat.

Nigel Evans: My hon. Friend speaks about fuel. She will accept that that now costs 1.08 or 1.12 a litre, or over a fiver a gallon. For people in my rural constituency, having a car is not a luxury; it is a necessity. The rural bus transport service is not sufficient. They need a car and they are being clobbered. The fact that they are being given a six-month reprieve before another 2p is placed on a litre will not be welcome news.

Jacqui Lait: I entirely agree with my hon. Friend, and I would love to find his rural garage that is charging only 1.12 a litre. I am paying considerably more than that. It will be exceedingly hard for people who must rely on their own cars, unlike the situation in London.
	London buses no longer come in threesthey come in dozens and most of them are empty, which has a serious impact on congestion in London. I notice that there are mixed messages coming from the Government about road pricing. As we understand it, the Secretary of State for Transport has withdrawn road pricing, yet the Chancellor is putting money into developing road pricing. It will be interesting to get some response in due course about what is happening with road pricing.
	The Budget ignores the big picture and focuses entirely on small issues. I want to examine some of the issues that I picked up from the Chancellor's speech. There was a mention of a contract between the Government and families in an attempt to get parents into work. I am having a hard time envisaging how such a contract would work. Is it a series of separate contracts, such as those that parents had with schools to ensure that the children turned up at school? Is it a contract with the jobcentre, whereby people agree to take the first job they are offered? Is it a contract with the local authority, whereby people accept lower housing benefit and council tax, provided they get a job?
	What is the contract? Will there be red tape coming out of the ears of families who just want to get back to work, because the Government think it might be a nice idea to have a contract and make people responsible, even if they do not agree with the Government's objectives?
	There is a promise about business red tape and a limit on regulation. Again, I have difficulty working out how that will happen, given that every time the Government introduce a Bill, it increases regulation. Does that promise mean, for example, that at Report stage on a planning Bill, we will see the Treasury finally releasing its grip on planning gain supplement and tabling an amendment to repeal entirely the Planning-gain Supplement (Preparations) Act 2007? That would be a serious step towards reducing red tape, and a simple one, because the Government say they do not intend to introduce PGS at all. Why keep the Act on the statute book? Let us have a gesture of good will. What is the limit on regulation and how will it work?
	The Government want to encourage zero-carbon homes. We all share that aim, but anybody who talks to the building industry will know very well that zero- carbon homes are technically impossible at present. It is possible to have, on balance and using a very complicated formula, zero-carbon communities, but not zero-carbon homes, as I understand it. The Government are trying to sound as though they are developing some serious strategic thinking on green taxes, so there are proposals on vehicle excise duty and the first year tax rate.
	My problem with the Government is that they like red tape. They like producing pieces of paper that limit people's scope, rather than encouraging it. If there is one message after 10 years of this Government, it is that they are unable to trust people to respond and to act positively in their own and their community's best interests. If the Government want to put over a message about green issues, people will not respond to taxation on their vehicles, particularly because of the need, as my hon. Friend the Member for Ribble Valley (Mr. Evans) pointed out, to use cars in the countryside.
	We should be ensuring that manufacturers and scientists work together to develop the science. There are exciting opportunities in environmental sciences. The Chancellor referred to that, although it was the usual glancing reference. The best way to make us green is through technological development, not by dragooning people into patterns of behaviour. Have the Government, after 10 years, not learned the law of unintended consequences? The minute anybody is forced into a pattern of behaviour, they find ways out of it. It is much better for people to decide willingly to go green than to force them.

Several hon. Members: rose

Jacqui Lait: Which one shall I choose? I think I prefer the hon. Member for Foyle (Mark Durkan).

Mark Durkan: We all take the hon. Lady's point that to make sure that vehicle emissions are at a much lower level, we want science and the motor industry to co-operate fully, but does she accept that fiscal measures such as vehicle excise duty are intended to create market conditions and market incentives that will motivate a partnership between science and industry? Unless there is a market in which they can meet with new products, it will not happen. That is why it has not happened to date to the degree that it should have.

Jacqui Lait: I disagree that that has not been happening. The hon. Gentleman may be disappointed that it is not happening at the speed he would wish, but the science is still in its relative infancy, so it is difficult to produce the family car for five. When the science moves on, the market will movewhen it becomes sensible to do so. To tinker at the edges and add vehicle excise duty to the cost of motoring is not the most effective way to deliver the changes that the Government and the whole House wish to see. We are all concerned about our green taxes.

Rob Marris: rose

Ken Purchase: rose

Jacqui Lait: I want to let others in, as I know that many hon. Members wish to contribute.
	I shall move on to one last point, which was not mentioned but which has been brought to my attention by a number of constituency casesinheritance tax. The Chancellor announced last year that all widows would benefit from changes in inheritance tax. There is one very small group that is possibly the hardest hitthose whose husbands died before 1972. The people in that group are now very elderly; one such constituent is 106 and her husband died 40 years ago. The inheritance tax changes do not apply to that group of widows. I am sure that that is an oversightat least, I would like to think so. I would hate to think that that group of very elderly widows was deliberately missed out. The money involved cannot be enormous. I hope that by the end of the Budget debate, perhaps tucked away somewhere in the Finance Bill, there will be a proposal from which every person who is liable for inheritance tax could benefit.
	I have covered the broad points that I wanted to mention and have picked up on one or two smaller points. Overall, the Budget was a yawn and will have little impact on the wider economy. All it will do is reinforce the difficulties that the coping classes face under this Government.

Gavin Strang: The hon. Member for Beckenham (Mrs. Lait) made an interesting speech; the House will hope that her more pessimistic predictions for the global economy do not come to pass.
	I am grateful for this opportunity to congratulate the Chancellor of the Exchequer, my right hon. Friend and Edinburgh colleague, on his first Budget. I particularly welcome the increases in child benefit and child tax credit and the winter fuel allowance for 2008-09.
	By any standards, the past 10 years of economic management have been a success story. Continued economic growth throughout the decade has been enjoyed alongside 10 years of low inflation and modest interest rates. Thanks to the stable and prospering economy, the number of people in employment in this country has risen steadily to record levels. The number of unemployed is at its lowest for 28 years and in my area that number has fallen by 57 per cent.
	It is fair to add that the economic success of the UK in the past decade has not taken place against a background of great global economic stability and tranquillity. After all, during that period there have been a number of shocks to the global economy, such as the dotcom bubble and the Asian financial crisis. All other G7 countries have experienced at least one quarter of negative growth in the past decade.
	Currently, the global background is once again somewhat tumultuous. I guess that at this time there is more apprehension about the future of the global economy than at any time since Labour came to power. Hon. Members and those outside no doubt listened more carefully than usual to the Chancellor's statement on the outlook for the global economy. There is clearly a big question mark over where the world economy will be in 12 months' timeprimarily, of course, because of what has been happening in the US.
	In the context of the Budget debate, there is always a huge focus on what we now call the public sector net cash requirement. That is understandable; the Chancellor has direct responsibility for striking the right balance between what the Government spend in any year and what they take into the Exchequer through taxation.
	During the Budget debate of two years ago, I raised the question of our balance of trade in goods and services. My question, to which I did not receive an answer, was about the extent to which we should be concerned about our trade deficit. Our balance of trade in goods and services has been negative for many years. We are net exporters of services; the balance of trade in services reached 36 billion in 2007. However, the increase in the negative balance of trade in goods has been even faster; it reached 87 billion last year.

Stewart Hosie: Is the right hon. Gentleman equally concerned that the tables in the Red Book have been changed? It is now almost impossible to do a like-for-like comparison without flicking through to other tables and small references to MTIC adjustment. The total balance of trade is not the 48.75 billion on the table, which would have been the same as for the year before, but 70 billionand that is tucked away somewhere else in the Red Book.

Gavin Strang: I congratulate the hon. Gentleman on his detailed scrutiny of the figures. He will certainly agree with me that the substance of the issue is more than worthy of comment.
	We have a positive balance in respect of services, but the position is different for goods. Even faster than the rise in the positive balance has been the increase in the negative balance of trade in goods, which reached 87 billion last year. In 1998, our overall total goods and services trade deficit was 7 billion. In the past five years, that deficit has increased from more than 30 billion in 2002 to more than 50 billion last year. I see the Exchequer Secretary on the Treasury Bench; I hope that at some point a Treasury Minister will say a few words about the significance of the trade balance in the modern world. I invite her, or any other Minister with the opportunity, to do sothe issue is clearly of considerable interest.
	To varying degrees, any one tax has two outcomes: it raises revenue and it influences behaviour. To their credit, in 1997 the Government declared a commitment to shift the burden of taxation away from activities that we want to encourage, such as the creation of employment, to activities that we want to discourage. That is clearly right in principle, and important steps have already been taken in that direction. One of the most significant measures for lifting taxation away from desirable activity was the introduction of the tax credit system in 1999. Through that, the tax system is used to help ensure that work pays and removes disincentives preventing people entering employment. The tax credit system has been a factor in raising employment throughout the country.
	However, I particularly want to focus on the environment, to which a number of hon. Members, including my right hon. Friend the Member for West Dunbartonshire (John McFall), have referred. I am thinking in particular of the need to put in place measures to reduce greenhouse gas emissions. Some years ago, the Government made a start on using the tax system to make our behaviour on these islands more environmentally friendly. The climate change levy was introduced in 2001 and the aggregates levy was introduced in 2002. Vehicle excise duty was restructured to reflect, for the first time, the environmental damage done by different makes of car. Alongside other environmental actions by the Government, those changes made for a promising start. Office for National Statistics figures show that the proportion of tax revenues raised from environmental taxes saw a modest risefrom 9.4 per cent. in 1997 to 9.7 per cent. in 1999.
	However, as the Environmental Audit Committee brought out in its recent report, that was followed by a series of cuts and freezes in key environmental taxes. As a consequence, green taxes as a proportion of all tax revenue fell below 1997 levelsto 7.3 per cent. in 2006.
	The Government should take credit for our being on track to meet the Kyoto targets, but we must also look at current trends and where they will take us. The Exchequer Secretary will be aware that the trajectory of UK greenhouse gas emissions is not as it should be. Our emissions have been on a plateau, with only the faintest trace of a decline between 2002 and 2006, the latest year for which figures are available. If the UK is going to do its bit to prevent catastrophic climate change, we will have to take far stronger action than we are taking now. The taxation system has an important part to play. I welcome some of the things that the Chancellor announced in that context, but I suspect that we will have to go further still.

Nigel Evans: Does the right hon. Gentleman agree that any green taxes should be revenue-neutral? Green taxes should be for encouraging people to lead more sustainable lives, but a lot of people are suspicious that they are being used as a smokescreen behind which the Government can raise extra revenue.

Gavin Strang: I hear what the hon. Gentleman says. If the tax is put on, it will have an effect, whatever happens. However, the hon. Gentleman's point is valid. Such taxes will be more acceptable to the electorate if they feel that although they are paying more tax for some things, they are paying less for others. We can hardly dispute that such a situation would make green taxes more acceptable.
	One of the duties that has been subject to cuts and freezes in recent years has been air passenger duty, andas the Environmental Audit Committee identifiedthe doubling of rates from February last year simply restored most rates to 1997 levels. Aviation is acutely undertaxed. It pays no value added tax, and hardly any aviation fuel is subject to duty. At the same time, aviation is the UK's fastest growing emitter of greenhouse gases.
	The announcement by my right hon. Friend the Chancellor in October's pre-Budget report that air passenger duty was to be reformed was welcome news. The Treasury proposes that air passenger duty become a charge per flight rather than a charge per passenger. In its recent report, the Environmental Audit Committee concluded that that will incentivise airlines to fill their flights. The Committee believes that short haul charges must reflect relatively high emissions and the fact that alternative means of travel are available. The Committee also recommends that the Government consider the introduction of an extra band to cover very long haul flights. I welcome my right hon. Friend's acknowledgement that he will not only maintain his policy on this tax but expect to secure a very substantial rise in air passenger duty in subsequent years.

Michael Jack: Will the right hon. Gentleman give way?

Gavin Strang: I will, but for the last time because a lot of Members want to speak.

Michael Jack: Did the right hon. Gentleman find anything in the Budget that might encourage expanding areas of aviation, such as the low-cost carriers, to adopt the most modern and least emitting types of aircraft?

Gavin Strang: The proposal to move from taxing flights as opposed to passengers is certainly a positive move. I hear what the right hon. Gentleman says. I am not sure how easy it would be to implement something like that, but we should constantly be looking at other ways of bringing pressure to bear. The inclusion of aviation within the figuresit is excluded at the momentis in itself long overdue.
	I want to move on to carbon capture and storage, which has already been mentioned by my right hon. Friend the Member for West Dunbartonshire and others. Electricity generation is the UK's largest single producer of carbon dioxide emissions. Traditionally, our coal-powered stations have been the highest emitters of carbon dioxide, and the move away from coal to gas in electricity generation played a large part in our being on track to meet our Kyoto target. However, coal is still the source of about a third of our electricity, and the House will be aware that new coal plant is planned.
	To reduce the carbon footprint of fossil fuel-fired power stations, carbon capture and storageCCStechnologies are being developed to remove the carbon dioxide that is produced and to store it for the long term. With the 2005 pre-Budget report, the Government launched a consultation and a competition for a full-scale demonstration plant, and with the 2007 pre-Budget report came details of the competition and the news that it would apply only to a post-combustion coal plant. That competition is welcome.
	The fact that post-combustion CCS should be suitable for retro-fitting existing plants is also an important consideration. However, the winning plant will not be built until 2014, and even then the CCS element need not be fully operational. The response to the potential of CCS should be on a larger scale and of greater urgency. In this context, I should mention last year's regrettable decision by BP to abandon its planned CCS project at Peterhead.
	As the Environmental Audit Committee pointed out, CCS power stations will cost more to build and run than conventionally built plants and will need ongoing support. That support could be financial, through mechanisms such as feed-in tariffs. It could also come in a regulatory form. The regulations could apply to plants that had been in operation for some years and that, it is to be hoped, should be able to retro-fit if the technology becomes available. In addition, we need to ensure that the new power stations are built with CCS in place, if the technology is sufficiently advanced, or, if it is not, that they are built ready for CCS to be fitted as soon as that technology becomes available.
	We do not know what the world economy holds for us in the next year. Clearly, the outlook is uncertain. I believe that the Budget gives us a good opportunity to do the best for this country and ensure that whatever the world economy holds we have the best opportunity of maintaining the stability that we need for our people and industry in this country.

Michael Jack: It is a pleasure to follow my fellow member of the Select Committee on Environment, Food and Rural Affairs, the right hon. Member for Edinburgh, East (Dr. Strang). I acknowledge his commitment to environmental issues and welcome his remarks on that subject.
	Before proceeding, I remind the House of my entry in the Register of Members' Interests.
	The first thing that one does when one listens to a Budget speech is to judge whether the overall impression is going to impress, depress or whatever. It is usually said that if there are great cheers, particularly from the Government Benches, the next day people will adjudge that the speech was not really quite as good as they thoughta bit like a Chinese meal that will be quickly forgotten. The deadly silence with which most of the Chancellor's remarks were received on the Labour Benches makes me tremble a little bit and think that perhaps there is something more inside this Budget that I did not spot. A silent Budget is usually one of those that has a longer-lasting effect. I am certain that that last prediction will come true, because it deals with some long-term economic trends.
	When it comes to people outsidethe public whom we represent in this Housedigesting what the Chancellor said, the first thing that they will realise is that they have heard it all before. It seems that the old idea of Treasury purdah has departed, as most of the content of the Budget, if not in specifics then certainly in themes, was well trailed by journalists at the BBC and elsewhere who seem to have had privileged access to what was in it. I would ask those on the Treasury Bench at least to give us some measure of excitement and, at a time when the Chancellor is struggling to say anything of great interest, to stop briefing the press and allow future Budgets to contain one or two measures of genuine surprise.
	Was there anything in the Budget for my constituents, who would perhaps have sought some comfort from its content in dealing with the things that worry them? They will have heard the Chancellor talk about this country's low inflation policy. However, I am afraid that although the target may be 2 per cent. on the consumer prices index, which the Chancellor has selected, inflation is much higher than that in the real world, as the retail prices index is well above 4 per cent. When people get their council tax bill through their door, see their rising cost of living and reflect on their rising uncertainty about their economic prospects, I think that they will find their own situation difficult to reconcile with the Chancellor's words of certainty as regards the economy.

Andrew Smith: Will not the right hon. Gentleman's constituents, especially those on low incomes, welcome the increases in child benefit and in child tax credit, and, from October next year, the very important disregard of child benefit in the calculation of housing benefit and council tax benefit, which will make a real difference to the incomes of many people on low wages?

Michael Jack: The right hon. Gentleman is right to paint some positive pictures. I am sure that those who are able to access the sources of funds to which he referred will be pleased so to do. However, my postbag is still heavy with correspondence from people who have problems with tax credits. Those people will still face an uphill struggle to ensure that they get that money, and when they review it against the rising costs of the basics in their living standards, they may well find that it is a case of giving with one hand and taking with the other. Those who are lucky enough to see themselves on a rising trend of income will immediately discover that fiscal drag is an issue that has not been addressed in this Budget. Many lower-paid workers will come into the tax bracket before they should, while those who are a little further up the income scale will find themselves paying the higher rate of tax when they might have hoped for some salvation from that. Fiscal drag is again being used by the Treasury to maintain income going into its coffers. The elderly, whom the right hon. Gentleman did not mention, and who might rejoice at the thought of another 50 on the winter fuel allowance, had better be warned that the Red Book tells us that that money is there only for one yearso that is, I suppose, this Budget's special offer.
	The Chancellor made a lot of reducing corporate taxation in terms of reducing the basic rate of corporation tax from 30 per cent. to 28 per cent. However, he forgot to remind the House that capital allowances are simultaneously being reduced. When those numbers are netted off, we find from the Red Book that there is a 100 million increase in income to the Treasury. By all means let us talk about competitive tax rates, which I welcome, but let us talk about the complete picture: business as a whole will pay more taxes.

Lorely Burt: Does the right hon. Gentleman agree that while larger businesses will experience a small decrease in tax, small and medium-sized businesses will not? They will be greatly disadvantaged.

Michael Jack: The hon. Lady, who had the pleasure of visiting my constituency not very long ago, makes a telling point. The Chancellor talked about the competitiveness of business, but she has just reminded the House that small and medium-sized enterprises are effectively suffering a tax penalty. To go back to the impression given by the Budget, once the numbers and the total picture have been gone through by financial commentators, people will find that it ain't as good as the Chancellor tried to paint it.

Rob Marris: The right hon. Gentleman referred to the fact that the picture is not so good, and to fiscal drag on tax bands. However, on page 113 of the Red Book there is an increase in the personal allowance for those under 65 of about 4 per cent. The starting point for the higher rate of tax has also gone up by about 4 per cent. That does not sound like fiscal drag to me.

Michael Jack: It may not, but I suggest that the hon. Gentleman, who I know takes a keen interest in these matters, looks again. He will find that the allowance for under-65s has gone up by a total of 210 allowable pounds, which represents about 45, which is roughly speaking a reduction in tax of 1 a week. Set against the cost of living increase that I mentioned earlier, people will not find that a particularly pleasant situation. I hope that the hon. Gentleman has not confused the amount of tax paid with the number of people paying tax, which is what the concept of fiscal drag is meant to address.
	While on the state of public finances, the other thing that intrigues me is that if we consider the next financial year, the Red Book last year had a projected borrowing level of 30 billion, but one year later, that figure has now risen to 43 billionan increase of 13 billion. If we consider receipts, we find that they are forecast to rise by 22 billion on last year's Budget. We therefore have rising receipts, bearing out what my right hon. Friend the Member for Witney (Mr. Cameron) said from the Dispatch Box: a rising trend in the payment of taxation and a rising trend in the level of Government borrowing. That illustrates keenly the difficult situation that the Treasury finds itself in, hence the overall gloomy tone of the Chancellor's remarks. He does not have any fiscal room for manoeuvre.
	I turn to three specific areas, the first of which is monetary policy. I am still concerned about the structure of the British economy. In my remarks on the Budget speech last year, I conjectured as to why, of all the western economies, the UK needed higher interest rates to achieve a similar performance with regard to inflationa target of 2 per cent. I query whether we need a national debate, if I may put it that way, on monetary policy. The drivers for inflation are matters that affect people's consumption at the momentthe cost of food, fuel and energy. Most people have a choice: they can spend on the basics, but their discretionary spending diminishes. We have witnessed that already in the reduction in retail expenditure.
	We have a zero-sum game, where money is going round, but is being spent on basics, rather than being part of discretionary spend. In recent times, the response of our monetary policy in trying to keep global inflation down has been to raise interest rates, or marginally to lower them with a potential depressive effect on the economy's ability to sustain employment and investment. I mention that because, to me, the most difficult element of the inflationary equation is whether people seek to address inflationary pressures through inflationary pay demands. In the public sector, the Government have already put a cap of 2 per cent. on what they are prepared to have as the norm. I suspect that the figure is between 2.5 per cent. and 4 per cent. in the private sector. I have not heard much from the Monetary Policy Committee or the Treasury about whether there needs to be a revised view of what constitutes inflation in the 21st century.

Austin Mitchell: I find myself in the paradoxical and unusual position of agreeing with the right hon. Gentleman. Does he agree that if the Bank of England had the double-header rubric, like the Fed, to keep inflation down and to maximise employment, it would make for better and more flexible policy?

Michael Jack: It is a pleasure to agree with the hon. Gentleman. I seem to recall that section 11 of the Bank of England Act 1998 defines clearly what the Bank's Monetary Policy Committee is all about; it is achieving the target that the Chancellor set. It is interesting that the previous Chancellor reset the inflation target from 2.5 per cent. to 2 per cent., just as we ran into the first serious series of commodity price rises that we had experienced for a long period of time. It is interesting to speculate as to whether we conspired to have a more difficult monetary situation simply by decreasing the target for inflation by a half of 1 per cent.

Ken Purchase: I have a slightly different point from that of my hon. Friend the Member for Great Grimsby (Mr. Mitchell) on monetary policy and the use of interest rates to calm inflation. Is it not the case that the measures announced by the Chancellor on longer-term mortgages will assist monetary policy by taking some pressure off the Bank of England when it sets interest rates, while recognising that a different market will come about with the longer-term interest rates announced today?

Michael Jack: The hon. Gentleman raises an interesting point, but longer-term mortgages relate to the stabilisation of people's personal finances, not the heart of the inflationary issue. Current inflation is being driven not by wage demands, although they may come, but by commodity prices and the world economic situation. With respect to the hon. Gentleman's point, long-term mortgages are a response but not a solution to those overall inflationary factors. I say to the Treasury that the time is right to have a discussion and analysis of the current nature of inflation because our response is still geared to previous inflationary cycles in the economy.

Graham Brady: I am interested to hear my right hon. Friend's remarks. Conversely, is it not the case that during the last couple of months, the Bank of England has decided to reduce interest rates at a time when it was clear that there were significant inflationary pressures? Does that not show a little more flexibility in its response than he suggests?

Michael Jack: Sadly, the hon. Member for Great Grimsby (Mr. Mitchell) is no longer in his place, but my hon. Friend's point goes back to the fact that we look to the Monetary Policy Committee to drive not only the fight against inflation, but the level of activity in the economy. Inevitably, the two are linked, but commentators ascribe to the Monetary Policy Committee the ability to influence all kinds of economic factors by virtue of its attempt to focus on the achievement of the inflation target. Although I acknowledge my hon. Friend's point, he does not go to the heart of what is driving our present inflationary situation. I would welcome a debate on whether we have the right mechanism. Broadening the scope of the Monetary Policy Committee may be rightI do not want to come to a conclusion on that matter without considering it carefullybut the time is right for a reappraisal of what drives UK monetary policy.
	The second area that I want to consider is that of sub-prime lending. Such lending grew in the United States in a situation where there was a lot of cheap money and people were looking for opportunities to deploy it. They suddenly alighted on the opportunity to allow mortgages to many people who probably should not have had one. The net result was that the American economy turned down and people defaulted on their mortgageswe saw what happened next. I carried out a little exercise to examine the corporate social responsibility reports of some of the banks in America that have suffered the most, in order to see what they said about their responsibility to wider society. Why did I do that? One of the clear trends in provision for, for example, old age, investment and paying mortgages is the weight that we now have to place on private sector investment vehicles. People's security and future well-being depend on the integrity of the products that the financial system now delivers. Events in the sub-prime market have shaken people's faith in those financial vehicles' ability to deliver long-term future funding.
	It is therefore interesting to read some of the American banks' corporate social responsibility reports. Citibank, which lost $18.1 billion, states in its corporate social responsibility report on its website:
	From affordable housing to sustainable economic development to financial education, our network of employees and resources provides many meaningful opportunities to serve our communities to really make a difference.
	What a difference chasing that last margin of those sub-prime loans made. It has contributed to shaking the foundation of western capitalism. We are now considering the instability of the banking system. Central banks are pumping in hundreds of billions of dollars to stabilise the system when so much depends on its stability.
	Merrill Lynch, which lost $14.1 billion, wrote under the heading Integrity on its website:
	No one's personal bottom line is more important than the reputation of our company.
	What, in the psyche of those banks, got them into a position whereby they put at risk not only their products but the statement of their public position and intent? I know from what the Chancellor said that a great deal is happening in international bankingthrough the World Bank, the IMF and so onbut if there is one issue with which it must deal, it is the integrity of those banks' actions. They should be forced to re-examine their commercial policies, which put at risk the very security of the millions of people whom we represent.
	A recent edition of  The Economist conducted some analysis of how good some of the experts are who run the funds that have been so badly affected by sub-prime lending. It concluded that the costs of the so-called professional management of our money were high and the returns were not much better than they would be if people simply followed the general indices of stocks and shares. It pointed out that, in Sweden, which privatised much of its future pension provision, many people invested in a fund that had grown by 534 per cent. in the five years preceding the change in Swedish policy, only to lose 70 per cent. of its value in the next three years. People were so frightened by that that inertia set in and they did not know what to do.
	That is the problem. Unsophisticated investors, of whom I count myself one, subcontract to experts the well-being of our future position. In the light of events in sub-prime lending, those in whom I and many millions put their trust have been found wanting. A fundamental re-examination of those banks' commercial requirements and their responsibilities to their shareholders and, more important, to wider society, is needed.

Stephen Hesford: Does the right hon. Gentleman agree that the Government were right to step in on Northern Rock to stabilise the position? Does he also agree that nationalisation was right?

Michael Jack: The Government had to take action on Northern Rock because many innocent individuals were caught up in something that was not of their making. Unlike the position of, for example, the Bank of Credit and Commerce International, whereby people were seduced by high returns on their money, Northern Rock looked like a good, normal bet. However, the Government have been found wanting on the speed of action and the direction of travel. The institution wallowed in difficulty and the share price has been adversely affected, perhaps disproportionately, by the delay in acting. However, some action had to be taken.
	The article in  The Economist that I cited earlier concluded:
	But whatever happens to the industry,
	the banking and investment industry
	it would do its reputation a power of good if over the next ten years its activities were adjusted to benefit its clients a little more and its managers a little less.

Jacqui Lait: I share my right hon. Friend's analysis, which he presents in a sophisticated manner. He mentioned the re-examination of the products of the businesses. Does he accept that an appreciation of what risk means has been missing?

Michael Jack: I agree because no investment can be risk-free. However, on the cost of investment, the Government tried the stakeholder pensiontheir only venture into that territory. Perhaps if the Financial Services Authority, the Bank of England, the Government and bankers came together to re-examine the matter, a fundamental rethink might occur of the cost of investing, the risk:reward ratio and the corporate social responsibility provisions to which many of the institutions subscribe, but which have been threatened by sub-prime.
	I want to comment on a couple of things that the Chancellor did not say. I find it intriguing that the former Chancellor said, when he first came to power, that the taper tax system had to be introduced because it would help capital accumulation in the economy. The current Chancellor has not explained why moving to a flat rate of capital gains tax is now better. I suppose that the only thing that is better is the 700 million in the Treasury's coffers. However, a little more plain speaking would be nice to explain what has changed in the fundamental operation of capital gains tax.
	It is disappointing that the Chancellor has not tried to simplify inheritance tax. I suggested in my Budget speech last year that we could have a low single marginal rate of inheritance tax if we did away with the panoply of allowances, many of which are accessible only if one can afford the professional fees for the advice about how to use them. Again, that suggestion was ignored, and we retain an incredibly complicated, old-fashioned tax, which needs modification.
	I stress to Treasury Ministers, especially the Financial Secretary, who is in her place, that I hope that, as the tax law rewrite project, with which I have been associated since its inception, nears the end of its major change to the clarity of tax law, the Treasury will not shy away from reacting to the enormous amount of work on improving the operation of the tax system. That is different from rewriting the law in a legible and understandable way. If the Treasury is to take with it the support of the accounting profession and others in the financial community to make Britain's tax laws work properly, the Financial Secretary needs to expand and change the tax law rewrite committee's remit to consider more carefully modifying and improving the efficiency of the tax system.
	With respect to the Chancellor, changing the way in which small and medium-sized enterprises access the tax system and report their financial transactions is not the same as making the whole system work better and simplifying it. The word simple is often used but it is difficult to achieve. However, many lessons have been learned through the rewrite exercise and they need to be examined.
	Let me consider green taxes. The Select Committee on Environment, Food and Rural Affairs, which I chair, suggested trying to encourage local investment in decentralised energy systems. We suggested to the Chancellor the introduction of a green ISAa unique instrument for investing in green technology or local, decentralised low-carbon schemes. Sadly, that did not figure in the Chancellor's speech this year. However, there are some remarkable examples in Germany of small communities with local networks of investors, which have now got combined heat and power schemes, which would be the envy of many communities in this country.
	Sadly, there was no mention of a buy-in tariff to encourage more decentralised electricity generation or help to deal with emissions from the heat sector. We all talk about electricity and transport, but heat accounts for one third of emissions in this country, yet is the one area where revolution and change are under-encouraged.
	I hope that the Treasury will look carefully at what I have said about the state and security of our financial institutions. They are so vital to the well-being of so many of the millions whom we represent. If, as a result of reacting to Northern Rock, we could address some of those issues, there might be a different way of expressing the concept of financial stability, for the long-term benefit of the millions whom we represent.

Ken Purchase: It is a great pleasure to follow the right hon. Member for Fylde (Mr. Jack) and to listen to his words of wisdom about our financial institutions. He agrees with the hon. Member for Beckenham (Mrs. Lait), who also made an excellent speech, about the problems resulting from, if I may say so, the misuse of financial instrumentsthe bundling up and selling off, the derivatives and futures, and the hedging. All are useful tools in the world of finance, but when misused, they have created enormous danger. The right hon. Gentleman made that extremely clear.
	Interestingly, I recall the Leader of the Opposition suggesting not so long ago that the City was falling out of love with Labour. On the back of the remarks that we have heard from the right hon. Member for Fylde and the hon. Member for Beckenham, it would seem that the City has not yet found a new suitor in the Conservative party, with those attacks on the behaviour of the very institutions that, formally and traditionally, were its major supporters. The Conservative party's whole approach has to find a new pathway, so perhaps the right hon. Gentleman and the hon. Lady should communicate that to their leader.

Michael Jack: I would not like my remarks to be construed as an attack; it is more a question of saying, Watch out! The expertise of those institutions is vital, and there is no substitute for long-term investment carried out responsibly by the City of London and other financial marketsbut on this occasion they got things wrong.

Ken Purchase: I am pleased to hear the right hon. Gentleman moving back towards the middle path that I was suggesting, which is to have a use for those instruments, but not a misuse. We can now take that as read.
	I want to concentrate my remarks on what I regard as the heart of the economythe manufacturing capacity in this country. I want to focus particularly on the auto and aerospace industries, and to consider them as part of the export effort that we must continue to make. If a Budget is about the gathering and distribution of taxation, there must be real wealth before anything of note can happen. That is why I choose to speak about the manufacturing industries in our country.
	Export is everything, as far as Britain is concerned. Whether in manufacturing or services, we must recognise that for an island economy, the choice is trade or die. Therefore, we have to make friends worldwide. The right approach to world peace is to have mutually advantageous trade. I wholeheartedly support the efforts of our exporting community to call for assistance wherever it is required, in their main effort of ensuring that Britain pays its way. I shall speak in a moment about the conditions of work in which we are operating, and the effect that those have on the balance of payments.
	The overall thrust of our economic policy has not been particularly helpful to our manufacturing industries. If manufacturing is at the heart of what we do, and most else is peripheral to it, we have for many years not taken care of it as we should have done. Our current balance of payments deficit is some 51 billionconsiderably different from what it was just 10 or 15 years ago. That figure is accounted for by a monthly deficit in manufacturing of 7 billion to 8 billion, which is offset only by a services surplus of some 3 billion.
	Given that situation, it is right to recognise that manufacturing has continued to increase its output, although its share of GDP has fallen. In 1995, the output of manufacturing and allied services was overtaken, in terms of growth in GDP, by the services sector. The services sector now accounts for some 75 per cent. of total output. Again, that illustrates the fall from grace of manufacturing in our country.
	At the same time, I should like to pay tribute to those in the manufacturing industries, by recognising that their productivity gain has been startlingstartlingly good, it is nice to report. Indeed, in 2004-05, it reached the giddy heights of 8 per cent. per annum. The figure has moderated a little since then, but it is still well ahead of the productivity gains seen in the services sector. Although more should have been done to assist in the manufacturing endeavour, those increases in productivity illustrate that manufacturers have, in the vernacular, been playing a blinder.

Nigel Evans: I share the hon. Gentleman's interest in the manufacturing industry in the UK. We are all aware of the balance of payments deficits overall, in manufacturing and services put together. However, does he agree that the Government ought to be doing more to support small and medium-sized businesses in particular, by holding more exhibitions and trade missions abroad and by giving those businesses more assistance to participate in them?

Ken Purchase: The hon. Gentleman shares my views on such matters. Of course I agree with that, but it is worth reflecting on the fact that although we have some seriously good manufacturersworld champions in many respectswe have an enormous tale of underperforming small and medium-sized businesses, which tend to cause a drag on the entire system. The measures announced today to encourage small and medium-sized businesses are helpfulprobably not sufficient, but the direction is helpful. I want to say a little about trade exhibitions and the export effort in a moment.

David Kidney: Although we could say that this Labour Government were slow to support manufacturing, would my hon. Friend give credit for the manufacturing strategy, its refresh, the manufacturing advisory services and the introduction of R and D tax credits? Does he think that such supports might explain why this year's survey of manufacturers by the EEFformerly the Engineering Employers Associationsays:
	Investment intentions this year have been the strongest since 1995?

Ken Purchase: I think that I read the same paper. That is absolutely true, and the Government have taken a number of measures. I am merely saying that they are insufficient. Everything is helpful, and I am a fan of the manufacturing advisory services in particular. Hon. Members may be familiar with their work in different regions, especially in assisting small firmsin efficiency and lean manufacturing, for instancewhich has been extremely helpful and well supported by the regional development agencies. In that sense, I readily concede that the Government whom I support have been taking measures to help small companies.
	I repeat that the message that I want to get across to those on the Treasury Bench today is that we are not yet doing enough; more needs to be done. We can see from the industry's productivity gains that it is responding magnificently, but its general output is still falling behind that of the service sector. That is not a sustainable policy for the long term. We must move back to a more vigorous, growing manufacturing industry. There is not a country in the world that is successful in the way in which we want to be successful that does not have a strong, well-performing manufacturing sector.

Jim Sheridan: I share my hon. Friend's passion for manufacturing. Does he welcome the Chancellor's statement today that Government Departments will be doing all they can to coach tendering propositions from companies in this country, and to procure goods from this country?

Ken Purchase: Yes, and may I also point out that many of our local authorities have a long and honourable record of putting together trade fairs especially for the benefit of local manufacturers, and traders in goods and services, in order to create a virtuous circle of economic growth within their districts? I want to see those practices expanded and made best use of, as they make a positive contribution to the overall effort.
	It is important to look at exports, and I shall come to UK Trade and InvestmentUKTIin a moment. We now have perhaps the most favourable exchange rates for manufacturing that we have seen in a considerable time. We have seen a fall in the pound against the euro of 12 or 13 per cent. since last summer, which is extremely helpful to our exporters. We have also seen a growth in the strength of the pound against the dollar, which is helpful in so far as many of the raw materials that we import come from outside the euro area, from the dollar areas. We then sell our manufactured goods into the euro area. That provides an ideal opportunity for the Government to redouble their efforts to give more encouragement to exporters to take advantage of these circumstances, which could last for another 12 months or just until tomorrowwho knows? We just do not know, but we must recognise that we have that advantage.
	In my constituency, some years ago, Goodyeara world-famous companywas buying rubber in the dollar markets and selling its products overwhelmingly into Europe. It was facing a reverse premium on currency of about 15 per cent. Thank goodness that has gone. The advantage that we now have is extremely helpful. Exchange rates are creating very favourable conditions, and this is an ideal opportunity for the Government to look really hard at how we might assist our manufacturing and export industries.
	The UK has the second largest aerospace industry in the world, outside the USA. In 2006, its sales reached almost 20 billion, and two thirds of that went into exports. The aerospace manufacturing community has responded magnificently to the challenges of global competition. It employsdirectly and indirectlyabout 275,000 people, and an additional 50,000 are employed abroad by the aerospace industry, mainly in the USA. It invests about 2.5 billion every year in research and development. Such investment certainly fell during the Tory years, but it has grown and stabilised since then, and it is still improving. That is to be welcomed. The aerospace industry remains very important to the future of our manufacturing industries. The technology base that it brings is invaluable, and must be nurtured. We have to cherish it, to ensure that the spin-off from the investment in R and D spreads out and benefits the whole country.
	In the auto industrymanufacturing, distribution and servicingthe business sales are about 200 billion per annum. It has 200,000 direct employees and 500,000 people employed in distribution, sales, servicing and maintenance who are supported by the auto industry. The industry represents 5 to 6 per cent. of our total manufacturing output. It, too, must be cherished, and our people are responding.

Lorely Burt: The hon. Gentleman comes from the same region as I do. I have Land Rover in my constituency, and Jaguar is close by. Ford has invested 700 million in research and development technology to make the vehicles more carbon efficient. The vast majority of the vehicles manufactured by Land Rover in the UK go abroad, which enhances our export performance.

Ken Purchase: It does indeed.

Nigel Evans: Those are the vehicles that the Chancellor has announced the extra taxes on.

Ken Purchase: Thank you very much.
	I endorse the remarks of the hon. Member for Solihull (Lorely Burt). We share a common interest in the success of the auto industry, not least because, although manufacturing employment in the west midlands has fallen from about 92,000 people 10 years ago to about 71,000 now, our region still massively outdoes any other region in auto industry employment. Our auto industry's exports in 2006 were almost double what they were in 2005, but imports of autos have risen even faster. We now have a trade imbalance of 6 billion- plus, compared with only 3 billion in 1995.
	So there we are. Manufacturing industry in aerospace, in autos and in other areas has, without question, responded magnificently to the challenge of global competition by rapidly improving its productivity figures, and that is to be applauded. I am not saying that the Government have done nothing; I know very well that they have taken action, and I have been cheering along many of the initiatives that have been taken. However, we must also consider the kind of support that is being provided in France, Germany and Japan.
	This brings me to the point raised by the hon. Member for Ribble Valley (Mr. Evans) about trade fairs. Frankly, we are pretty abysmal at all that. We set up an organisationUKTIunder this Government in 1999, and we promised that it would do the job of ensuring that Britain's voice in trade was heard far and wide. The truth is, however, that we have under-resourced it ever since. A proper review of the needs of UKTI must take place without delay, so that it can fund the trade missions that make such a difference, especially to small and medium-sized companies. The bigger companies can look after themselves in the world market in most cases, as long as their own Governments are providing the right framework.
	Our local chambers of trade and the regional agencies are anxious to promote the worldwide opportunities for export that the smaller companies often do not take advantage of, simply because they lack the support to take them abroad to do the business. I ask those on the Treasury Bench, again, please to recognise that in UKTI, whatever faults have been found and criticisms have been made, there are the tools to do the jobbut as ever, we need to ensure that it has the resources to back up the work that it can do and the expertise that it has developed over these years. We need to recognise that we must stop fiddling with itwith name changes, different duties, sectionalising what can be done, and targeting this and that. For goodness' sake, let us recognise that in many ways one export product is as good as any other, and give that general support to the exporting effort that I know would be extremely welcome.
	There you have it. We are doing good but, in the words of the advert, We're no' doing great. The way to do that is to support our manufacturing and exporting industries and to ensure that the heart of this country and its wealth creation is in good shape for the future.

Peter Lilley: It is a pleasure to follow the hon. Member for Wolverhampton, North-East (Mr. Purchase), who rightly reminded us of the importance of manufacturing industry. When I was Secretary of State for Trade and Industry, my mantra was that we could not have a healthy economy without a strong manufacturing sector, which, as he emphasised, is increasingly higher value-added and high tech.
	Of course, Governments cannot always decide the proportion of economic activity in manufacturing and in servicesthey want both to be strong and good. As an economy, we have benefited from a strong service sector and a strong financial services sector over the past couple of decades because the relative demand for those services has risen. I fear that in a period of economic difficulty focused on the financial services sector we will have greater difficulties than some countries that rely less on that sector than we do. We need to be careful about that and we are jolly glad that we have a manufacturing sector such as that described by the hon. Member for Wolverhampton, North-East.
	My right hon. Friend the Member for Fylde (Mr. Jack) described this Budget as a Chinese mealsoon eaten and even sooner forgotten. That is a fair description of the Budget, but a very unfair description of a Chinese meal. I invite him to join me for a meal in the Oriental Garden in the village of Offley, from which I come. He will have a very memorable meal.

Michael Jack: May I immediately reciprocate my right hon. Friend's generosity? I look forward to getting our diaries together.

Peter Lilley: I would like to enter that on the Register of Members' Interests.
	A disgraceful feature of this Budgetit has, I am afraid, been a feature of Budgets in recent yearswas the lack of transparency and the tendency to exclude from the speech important measures or any details that make comprehensible the measures that appear in it. I can remember, as I am sure my right hon. Friend canwe were both Financial Secretaries to the Treasury, and I was Economic Secretary before thatthat when we drew up Budgets, officials would sometimes say, You've got to include that measure. It might be boring, but it's important. It raises revenue. Invariably, we would say yes. There was a presumption that anything important or significant had to be included and explained and the cost made apparent. The tendency in recent years has been to do exactly the reverse and say that anything important, anything that will be painful or anything that imposes burdens of taxation on people will be hidden in the small print of some press release and barely mentioned in the speech.
	We had the extraordinary experience of the Chancellor giving a Budget speech shortly after taking 100 billion of additional liabilities on to our balance sheet without mentioning that he had nationalised a dodgy bank or that he had included the extra loans on the nation's balance sheet. I find that disgraceful. It is not treating the House or the nation fairly. I understood that the Office for National Statistics had said that that would be on the balance sheet. The figures should be included in the nation's assets. The fact that the provision does not come in until the first day of the new financial year is not an excuse for not including it in today's Budget.
	Closer inspection of the book leads us to discover that the lollipop in the speechthe offer of an increase in the winter heating allowance that the Chancellor announcedwill be financed for only one year. It is a one-year increase. Will it disappear next year? If it will, that is fair enough, because no money has been set aside for it. However, if the Chancellor is giving the impression that it will be extended this year, no money has been set aside and there is some dodgy financing going on there, too.
	We were not reminded that the most significant change that will occur in the tax system as of 6 April is the abolition of the 10 per cent. rate band: 5.3 million of the least well-paid people in this country will pay more tax. The Chancellor did not mention it, let alone point out its impact on those people's standard of living. He also failed to remind us, of course, that it was introduced in an attempt to create the impression that he was cutting the basic rate of income tax by using the money in his last Budget to announce a 10 per cent. basic rate cut while eliminating the 10 per cent. rate so that most people actually end up paying more.
	The Chancellor accidentally said that he was cutting corporation tax from 38 per cent. to 28 per cent., when the actual cut is from 30 per cent. to 28 per cent. I think that that was just a slip of the tongue; I make no complaint about it, as we all make such mistakes and I am guilty of them from time to time. What the Chancellor did not mention, however, was that the corporation tax rate for small companies is going up as of the beginning of this financial year. That matters to millions of small companies, which are, above all, the job and wealth creators of the futureand hopefully the big companies of the future. They are enraged by that prospective increase and the fact that it is being made at these particularly uncertain times in the economy.
	The Chancellor was remarkably opaque about what he is doing with non-domsnon-domiciled residents who work here, but do not necessarily pay tax on overseas income. They pay tax on their income in this country and it would have been interesting to hear from the Chancellor exactly how much tax they pay on the incomes they generate in this country. It appeared to me that the Chancellor was backing off in his proposals and reverting more to those made by my hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor, to pay a flat 25,000. Of course, the Chancellor charges moreunsurprisingly, as Labour always charges morebut once the non-doms have paid, no further inquiries are made about their foreign revenues.
	In fact, when the Chancellor said that he was going beyond that and was not only going to charge the non-doms that sum, but start chasing their overseas income and investments as well, he produced an absolute uproar among the non-dom community resident in this country.
	A friend of mine, who is not a non-dom in this country and is not even resident here, has a business in central Europe. He lives in Zurich. He told me that he was delighted by what the Chancellor proposed because the outflow of non-doms from this country to Switzerlandto the fashionable suburb of Zurich where such people livehas been such as to treble the value of his house since the announcement was made. The idea that this is just a brouhaha is not the case; people are physically upping sticks and moving, and we are losing not just the 25,000 or 30,000 that they might pay, but the hundreds of thousands in tax revenues that they are paying on their incomes in this country, generated in this country, and, of course, the prospect of moneys being returned from abroad to this countrynot to mention the contribution they make to arts and charities.

Lorely Burt: Will the right hon. Gentleman clear something up for me? Was not a 30,000 tax for non-doms initially a Conservative proposal?

Peter Lilley: I am sorry that the young ladyI mean hon. young Ladyhas not been listening. I said that I hoped that the Chancellor was reverting more to the proposal that my hon. Friend the shadow Chancellor made for a flat licence costing 25,000 a year. The idea was that if a non-dom paid that, no further inquiries would be made into foreign income. The Chancellor then went much further by saying that in addition to paying the flat fee, investigations would be made into foreign trusts and related financial matters. As I was saying, the non-doms were not prepared to tolerate that, hence the outflow from this country.
	The Chancellor seems to be moving from that position, but it is very hard to tell even from the press releaseit is simply impossible to tell from his speechwhether he has done a complete U-turn. I very much hope that he has and that he has adopted the shadow Chancellor's more sensible proposal, as a result of which some of those who have moved to Zurich may think again. The press release says that the Chancellor is not going to charge for people's children. It has always struck me as an extraordinary idea that one should have to pay 30,000 a child, although 35,000 is still going to be payable for a wife. How that applies in a system of independent taxation, I do not know.

Lorely Burt: Spouse.

Peter Lilley: I should say spouse, yes. Wealthy wives will have to pay for their non-earning husbands and vice-versa.

Austin Mitchell: It must be admitted that although the formulation has changed, it is clear that the Conservatives were proposing to raise a far larger sum through their taxation of non-doms than will be raised by the present system. Did that trebling of house prices in Zurich begin at the Conservative party conference, when the Conservatives first announced their intention to hit their friends, or did it begin when the Government followed suit?

Peter Lilley: I think it began the day the Chancellor started announcing proposals to investigate overseas earnings and bring them into the United Kingdom tax regime, on top of charging 30,000 per member of a household. I am pretty sure that concerns will be lowered if he has indeed performed a complete U-turn.
	The one thing that we do know about the Chancellor's proposals is that he has committed the next Parliament not to change them. But, as the hon. Member for Great Grimsby (Mr. Mitchell) will know, one cannot commit a future Parliament to anything. One can commit one's party for a future Parliament, but one cannot rely on its being in government. I certainly hope that we cannot rely on the Chancellor's party remaining in Government. I think he should at least have made it clear that he was speaking only for his own party. I am sure that my party will do all in its power to alleviate the problems that he has created, but the next Parliament cannot be bound by anything that he has announced today.
	The central issue underlying the Budget was how prepared we are in this country for a potential slowdown in the British and world economies. It is not the job of Members of Parliament to forecast the future. When it was my job and I was a forecaster, I enunciated Lilley's rule, which was Never make a forecast except about the very distant future or the immediate past. That is the safe thing to do, because one cannot be found out, but one can claim to have forecast what has just happened.
	I do, however, remember the distant past. One of the advantages of having reached my stage in life but having, before arriving in the House, had a career in the real world is that I observed what happened in the 1960s and 1970s, and I have a sense of dj vu. Then as now, America was fighting an unpopular war. Then as now, it was financing its unpopular war without raising taxes. Then as now, that produced a huge deficit in the American Budget. Then as now, that Budget deficit produced a corresponding deficit in the balance of payments and a big outflow of dollars across the world, which was absorbed in the foreign exchange reservesthen those of Germany and Japan, now those of China and other countries.
	For quite a long whilethe best part of a decadethat outflow of dollars across the world produced an unparalleled period of prosperity and strong growth combined with low inflation. We seemed to have the best of all possible worlds, much as we have had for the last decade or more in the western world. But, then as now, the outflow of dollars began to drive up commodity and oil prices. We are in roughly that position at the moment. We know what happened next then: for a while the rising commodity prices seemed to be absorbed by, for instance, the squeezing of margins of companies and a burst of productivity increases, but after a while that could not be maintained. Rising commodity prices showed up in rising prices of goods and services, and inflation began to accelerate. When Governments tried to slow that inflation by putting on the brakes, they were landed with stagnation with no reduction in inflation. Stagflation was the phenomenon of the future.
	The only question that we need ask is Why should it be different this time? Why should history not repeat itself now? But our history does not always repeat itself.

Stephen Hesford: I am obliged to the right hon. Gentleman, who will have an active memory of those times. I was still at school but have read since that, yes, the UK had stagflation, but stagflation was not universal. There were economies that survived and prospered but, unfortunately, not the UK's. Is not the position the other way around this time? The UK is in a position to survive, but other economies are not.

Peter Lilley: That was very much the question that I intended to address and I am grateful to the hon. Gentleman for prompting me. It is the important question; not merely, Will it be the same this time? It may not. Marx said:
	History repeats itself, first as tragedy, second as farce.
	Maybe it will be farcical this time, maybe not. If it is to repeat itself, how well placed are we to cope with something similar? The lessons of the period when the hon. Gentleman was at school and I started at university, before working first as an economic consultant and then in the City, was that countries that had run a very tight ship experienced far fewer problems during the latter and more painful unravelling of events than those that had run large budget deficits and a less tight ship. The sad truth is that we now have the highest budget deficit of any major country, with the exception, as my right hon. Friend the Leader of the Opposition pointed out, of Bangladesh, Pakistan and Hungary.

Graham Brady: Egypt.

Peter Lilley: Egypt, Pakistan and Hungary. My apologies to Bangladesh. It is sad that one must apologise to Bangladesh for being compared with the UK; there were times when it would have rather welcomed such a comparison.
	Running a tight ship is important. We have not done so and the prudent period of the early stage of the Governmentwhen they committed themselves to following the spending plans they inherited from their Conservative predecessorsgradually eroded. At precisely the time they ought to have been starting to be more cautious, they became less cautious. They ought to have been repairing the roof while the sun was shining; instead, they were squandering the money coming into the Exchequer.
	The second feature that helped countries in those difficult times was that they had strong foreign exchange reserves. The Prime Minister squandered our gold reserves; had he known history, he would have realised that gold is one of the things that increases in value most during these cycles. The losses that he incurred by his decision to sell off the gold reserves exceed the losses of any of the Jerome Kerviels or Nick Leesons of the past, making him the biggest rogue trader of all time. The fact that our reserves are not as healthy, to the tune of many billions of dollars, is a sadness.
	Countries that had lower tax burdens did better in those circumstances than countries with high tax burdens. It is sad, too, that we have moved from having one of the lowest tax burdens in Europe to having one of the highest. We have overtaken Germany, not just because our burden has been going up but because other countries, prudently and sensibly in the good times, have been cutting their tax burden; we have not.
	The fourth feature that helped countries weather the storms was flexible labour and other markets. I am happy to say that we did liberalise our labour markets and reform our trade unions during the 1980s and 1990s. The Government inherited that and have retained a good part of it, which puts us in a better situation than we might otherwise be in. But they have been adding burdens to businesses and companies, regulating and collectivising, which means that we will be a bit less flexible than we might have been and a bit less well placed to deal with the possible dangers of coming years.
	We should also ask why the credit crunch is occurring: why are we facing the current difficulties in international banking and credit markets? It has been suggested that the crunch has been caused by a lemming-like move by banks and other financial institutions to invest in high-risk and imprudent investments. However, banks and financial institutionssome of them, at leasthave always been prone to being imprudent. Some have always made bad investments, but those bad investments do not normally provoke a credit crunch. So what is different this time? It is a moot point whether imprudent investments, which have undoubtedly been made, have caused the crunch or whether the crunch revealed the imprudence. I drew an analogy in a recent debate: when the tide goes out, we see who was swimming naked, but the fact that some people forgot to wear their bathing trunks did not cause the tide to go out. Likewise, when the tide of credit ebbs, we discover who was making imprudent investments, but those imprudent investments might not have been what caused the credit crunch.
	The usual criticism of banks is that they will not take risks. I constantly meet businessmen who say, I've got a terrific idea and project, but the trouble with the banks is that they will not take a risk. As the banks are usually criticised for preferring safe investments to risky ones, why have they apparently moved towards investing in riskier assets in recent years? I suggest the answer is that interest rates have compelled or encouraged them to do so. We have been through a period of low interest rates in real terms. That is to do with the supply of savings relative to the available investment opportunities. The supply of savings comes above all from China, but it transfers itself across the world economy, and in order to bring about a balance between borrowing and lending and saving and investing, interest rates had to be held lower. That meant that people had to invest a large sum of money in lower yielding assets because there were not enough higher yielding assetsin less secure assets because there were not enough highly secure assets. They did so because that was all that was open to themnot because they suddenly became transfixed with the idea of taking high risks for low yields, but because there were not any high yields for low risks. If they had not done so, we would not have had a balance between supply and demand in savings and investment, and we would then have been in the classic situation of a Keynesian credit slump.
	Suddenly, the banks are now holding off from investing. Instead of everyone praising them, saying, Oh, good, they are being prudent; how wonderful, the central banks of the world are saying, For God's sake, resume lending. We will flood the banking markets of the world with moneycheap, easy, readily available, often secured against rather dodgy assetsbecause we want you to start lending again.
	The problem has been aggravated by the fact that the banks thought they had security by lending against collateral. They took as collateral solid bricks and mortar: property. The banks and financial institutions of the worldincluding Northern Rockinvest in mortgages secured against physical assets. The trouble is that the value of physical assets is a financial issue, not a matter of physical bricks and mortar. For a while it all seemed wonderful. They took property as collateral. That encouraged more investment in property. That drove up the price of property. That seemed to validate their decision to take property as collateral. It was all hunky-dory until there was a feeling that the money created by that lending was flowing into other markets and inflation was beginning to rise. The central banks across the world began to raise interest rates again to choke off the prospect of inflation. Their doing so initially choked off inflation in the housing market in Americait is beginning to do the same in the UK. Suddenly, the collateral was worth a lot less; there have been sharp falls in property prices in America. The property bubble burst, and that had a synchronised effect. It was not the random effect whereby someone dealing with different businesses in different markets will find that some experience problems while others do well. Because the banking system as a whole was relying on property as its collateral, the banking system as a whole found itself in difficulty.
	The whole world financial system is hugely brittle; we are sitting on a knife edge. The financial institutionsthe monetary authorities, led by the Federal Reserve and with our own central bank joining inare trying to flood the system with money to start people lending and borrowing in order to prop up the value of collateral. They are dealing with a difficult problem and there is no guarantee that they will succeedI think Keynes described it as like pushing on a stringbut I hope that with enough cheap money they will. The difficulty lies in whether they can restart things without going to the other extreme and triggering greater inflation next time round.

Bob Spink: On a point of order, Mr. Deputy Speaker. I wonder whether you could advise me on how I can inform the House that I have, as of today, resigned the Conservative Whip because the party has failed to deal with serious criminal and other irregularities in my constituency.

Mr. Deputy Speaker: Order. I think that the hon. Gentleman has done enough to inform the House on that point. It is certainly not a point of order for the Chair.

Peter Lilley: Well, not only is the world financial system brittle and on a knife edge, but so is the future of my hon. Friend the Member for Castle Point (Bob Spink).
	All this House can do is recognise that those monetary authorities have a delicate task in trying to get us back to a position of balance between the risk of deflation and the risk of inflation renewing. We must recognise that the solution will not be found simply in piling regulation upon regulation on to the financial system. The problem was not caused by regulatory inadequacy, although there have been such inadequacies. It was not even caused primarily by a spontaneous eruption of imprudence, although there was imprudence. It was caused by a basic problem in the financial system, which built up over quite a long period and will require the greatest delicacy and wisdom to resolve. The Budget was presented in that context, but I fear that it did not prepare this country adequately for the difficulties that may be ahead of us.

Barry Gardiner: Conservative Members have spoken about the burden of taxationthat is how they regard itbut I regard taxation as the price that society pays for civilisation. Taxation is the Government's key instrument for delivering social justice. Taxation is not only certain in life, but necessary. It is needed to bring about the equality upon which any cohesive society must be based. On that view, equality does not undermine libertyit undergirds it. I therefore look to the Budget to use fiscal policy to redistribute wealth and create social cohesion. The Chancellor's proposals to take a further 250,000 children out of poverty do that, and I welcome them. I also welcome the rise in the winter fuel allowances for the elderly for the same reason.
	The background to this Budget is clearly in the United States of America. Some 63,000 jobs were lost there in January alone, and the word recession is now being spoken quite openly in American boardrooms. The Federal Reserve has already cut interest rates by 1.75 per cent since last summer, and on Friday it pumped $200 billion of liquidity into the financial markets.
	The US sub-prime market was based on such liquidity, and I echo the sentiments of the right hon. Member for Hitchin and Harpenden (Mr. Lilley) and the hon. Member for Beckenham (Mrs. Lait) on that point. It was based on liquidity within and between lending institutions. When that liquidity dried up, it was no longer possible to bring in more debt at the bottom of the pyramid, and the turning point in the market was reached. But liquidity is not an answer on its own. It is capable only of masking a bad business model for a time, not of curing it. The sub-prime market was a bad business model, for the reasons that hon. Members have outlined. It was aimed at people who should never have been drawn into such a level of debt.
	My right hon. Friend the Member for West Dunbartonshire (John McFall), the Chairman of the Treasury Committee, discussed Northern Rock and the FSA's role as regulator. I wish to make some broader remarks about regulators and credit rating agencies and draw some lessons for other sectors of the economy, such as the utilities sector.
	UK utility regulators have trusted in credit ratings. Their use of ratings was always a misuse, but now it flies in the face of increasing evidence that they can be dangerously wrong. Northern Rock, of course, is a prime example of that. Regulators have allowed increasing debt at a time when the impact of global warming is causing severe financial shocks to utility companies. The regulators' reliance on credit ratings now looks dangerous and out of date. The UK's economic regulators have a legal duty to secure licence holders' ability to finance their activities. That duty has been viewed as a need to check, inter alia, that companies are not over-leveraged, which regulators have achieved by requiring a combination of investment-grade credit ratings and a secure ring fence around the regulated legal entities.
	Two major problems with that approach have emerged: the first is with the credibility of credit ratings and the second is with the stability that the ring fence can create. Rating agencies have made a series of systematic errors in many of the world's major industry groupings. The list of those affected in this decade alone is staggering: in power and energy, it included the independent power producer sector from 2001 to 2004; in telecoms and media, it has included major telecoms companies such as WorldCom. It has also included financial institutions such as Northern Rock, and of course property, with the US sub-prime sector.
	It is also at least arguable that the regulators are abusing credit ratings. The rating agency Fitch Ratings defines a BBB rating as indicating that
	there are currently expectations of low credit risk.
	Note the use of the word currently. The rating agencies clearly use a probabilistic approach and state that ratings are not immutable, whereas the leveraged financing structures allowed by regulators may stand for 25 years. The credit rating downgrade of some monoline insurers who guarantee junior debt in many securitisations highlights the degree of systematic change possible, even in a relatively short time frame.
	There has been a strong and coherent argument supporting leveraged financing structures in utilities: high leverage focuses management attention on delivering tight budgets and reduces the cost of capital, thereby allowing lower tariffs. The corollary to that is that it may also reduce flexibility, and we need to heed that warning. Decision making by utilities dealing with the crisis should not involve seeking permission from creditors to spend money. Given typical restrictions in leveraged finance agreements, circumstances in which that is exactly what would be required are perfectly plausible.
	Last summer saw widespread and devastating floods across many parts of the UK affecting all types of infrastructure, including utilities. Fortunately, the utilities affected, such as Severn Trent Water and Central Networks in the midlands and CE Electric in the north-east, are owned by well capitalised holding companies. Severn Trent Water alone reported costs of between 25 million and 35 million to respond to the floods. It is increasingly important that utility companies are able to withstand a financial shock. Global warming is causing freak weather, and the financial flexibility required by utilities has to be increased if they are to be able to respond immediately and effectively to the type of incidents that we have seen in this country.
	Regulators have powers to impose cash lock-ups on licensed utilities and to apply for a special administration if a company cannot finance its activities, but both courses of action are problematic. A cash lock-up can be imposed, but if a company has no cash at the time it will still not have immediate access to funds, and special administration is not straightforward. An administrator's duties in some areas conflict with those of a regulator: an administrator is appointed by a court and has a duty to a company's creditors, whereas regulators have duties regarding customers, such as the economic delivery of services and, of course, the security of supply.
	Our regulators all have access to significant investment banking and capital markets expertise. The increasingly prevalent model of leveraged financeboth Norweb and Southern Water were subjects of leveraged acquisition at the end of last yearcovers a range of water, electricity and gas companies. There is now sufficient evidence that credit ratings are not a suitable method for regulators to discharge their duty to ensure that companies can finance their licensed activities to justify a move to a more bespoke approach. High debt levels have helped to keep tariffs low, but low tariffs are not more important than keeping the lights on and the water flowing. I hope that we will apply the lessons learned from the events in the sub-prime market and our experience of Northern Rock to a wider range of service sectors in this country. If we do not, similar problems could arise in future.
	In 1993, the first Labour suggestion that non-doms should be taxed on their worldwide income was made. At the time, I ran a company of general average adjusters in the City, and I well remember the concern that that suggestion caused in the shipping world and the financial services sector. I took a delegation to meet my good friend Paul Boateng, now our high commissioner in South Africa but at that time our shadow Minister with responsibility for banking and finance, to point out that the potential loss to the economy was greater than the potential gain. I am glad to say that he and the shadow Chancellor drew back from the suggestion.
	Looking at the figures now, it is clear to me that estimates varywell celebrated fag packets have been used in the calculations. There are figures suggesting that between 4.5 billion and 7.5 billion is contributed to the country in revenue by non-doms. Estimates of further spending into the UK economy range as high as 16 billion.
	One of the principles of taxation was expounded by John Rawls in 1973 in his great work A Theory of Justicethe maximin principle: one does not do anything without ensuring that it will improve the lot of those who are worst off in society. The point of taxing non-doms must be that more revenue will be gained than will be lost from the off-putting effect of the revenue-raising measure. It has not been shown that that will happen as a result of the moves made in the pre-Budget review. I am extremely pleased that the Chancellor appears to have backed off from a number of suggestions that would have been quite wrong and improper, and that would have violated the maximin principle. They would have actually caused a net loss to the Treasury overall.
	I welcome the fact that income and gains in offshore trusts will be taxed only when they are remitted to the UK, even if they come from UK assets, and the fact that children will not pay the 30,000 charge. It would be better if the 30,000 charge were per family, rather than per adult in a family. The 30,000 charge should be creditable against foreign tax. That is significant when it comes to dealing with workers from American companies in the UK, and with regard to the risk of double taxation.
	There has been talk today of a flight of non-doms. It is important to recognise that owing to turbulence in financial markets, what has been going on in the sub-prime market in the US, and the situation as regards liquidity, debt markets across the globe are contracting, as are credit markets. All those in the City working for big American or overseas banks face a contraction, too. There is already a flightan exodusand it is due not to anything that the Chancellor proposed in the pre-Budget report, or anything that he is proposing now, but to that contraction in the market, which is the result of what has been going on in the sub-prime and other sectors in the United States.
	I welcome the change to the position regarding art works brought into the UK for public display or repair and restoration; they will face no new taxation. I also welcome the fact that people with unremitted offshore incomes and gains of under 2,000 are exempt from the charge and the changes to personal allowances.
	The biggest problem with opening the Pandora's box of reassessing the position of non-doms is that non-doms bring revenues and expertise to the country, and form the epicentrethe honey-potof the shipping world, the legal world and the financial world in the UK. We do not want to lose all that that brings into the City of London, and the revenues that flow from that, which are used for the benefit of the rest of the country.
	Treasury officials' valuations of how much a measure relating to non-doms would bring in are between 500 million and 800 million. That is nonsense, and it has to be seen as nonsense. The introduction of such a measure was rejected by Margaret Thatcher, by Labour in opposition, and, at first, by Labour in government. Why has Pandora's box now been opened? It is because the Opposition came up with a proposal for a simple 25,000 levy on non-doms, and officials in the Treasury thought, That gives us cover to see whether a Labour Chancellor will go for such a measure. The real problem is uncertainty. To raise the issue is to open Pandora's box. People need certainty in their tax planning. International businesses need certainty and clarity in that regard. In view of the position of the two parties, people will not be clear whether they should locate in London and continue to bring their expertise and finances here.

Rob Marris: I agree with my hon. Friend that the issue is delicate, but I caution him, because it is a delicate matter for a Labour MP to stand before the House and effectively say, Let's stand up for the rich, and let's have one law for the rich and another for the poor.

Barry Gardiner: No, it is not a delicate matter; it would be a foolish thing for anyone to do. It is not a matter of standing up for the rich against the poor. That is the point that I am making, and it is why I particularly stressed the maximin principle that John Rawls established. That is why I said that for a poxy 500 million to 800 million we should not risk our economy losing a potential 3.5 billion, 4.5 billion or 7.5 billion. I want to ensure that we get this right, so that that money is spent protecting the poor and so that we have the resources to increase the fuel duty allowance and to take 250,000 children out of poverty.
	My fear is that the uncertainty will put people off. It was a bad measure, and it was a bad measure when the Conservatives suggested it. The criticism from the Conservative Benches was quite rich, given that the Conservatives launched the policy. It is a terrible thing when we cannot trust the official Opposition to get their sums right in the first place so that we can steal their policy.
	I have welcomed taxation as an instrument of social justice. However, it can be used not only to redistribute wealth but to change behaviour. I am pleased to welcome the measures announced today to increase revenues from plane duty by 10 per cent. in the second year and to exclude from road tax in the first year cars with emissions lower than 130 g per kilometre. Those measures seem genuinely designed to change behaviour and to encourage people to pollute less.
	That is important, because such fiscal measures, if not designed to change behaviour, tend to operate against the first objective of taxation, which I believe is social justice, because they allow the rich to go on polluting, but they stop the poor from engaging in the same behaviour. Because of that, the fiscal neutrality such as that urged by the hon. Member for Ribble Valley (Mr. Evans) is not always a salient point and is not necessarily just. If additional revenues are raised from rich polluters, they can be redistributed to poorer citizens who have been forced to change their behaviour. That undermines the point that he made earlier.

Graham Brady: Tax on motor cars is banded according to how badly they pollute the atmosphere, so why cannot aviation tax similarly reward airlines that use cleaner aircraft? Why are all aircraft to be taxed at the same level, without reference to how clean or dirty they are?

Barry Gardiner: The hon. Gentleman makes a fair point. It is his own point, not one that I have considered, so I cannot enlighten him.
	The delayed fuel duty rise of 0.5 per cent. over inflation is not necessarily a green measure and is not seriously designed to change behaviour. It is more a compromise between inflationary pressures and the need to raise additional revenue. We should consider more innovative environmental fiscal policies. The UK Government should take a lead in stimulating markets for environmental services that are not the subject of mandatory regulation. We should use the tax system to create financial incentives for businesses to invest in projects and purchase environmental service credits and offsets for environmental services, such as maintaining biodiversity, which are currently wholly voluntary. Subject to an annual limit, businesses subject to UK corporation tax could be granted a credit against tax for such investments or offsets, and the tax credits would be freely transferable between such taxpayers. Such an approach can provide a bridge between wholly voluntary CSRcorporate social responsibilityinvestments and the developed market for environmental services.
	At the Rio summit in 1992, three treaties were launched, one of which we always talk aboutthe Kyoto treaty or protocol. The other two were the biodiversity convention and the wetlands convention. The key difference among them is that only the Kyoto protocol provided for mandatory limits on environmental damage. That aspect of the protocol laid the foundation for the trading of emissions credits and offsets which is now attracting considerable investment; the market is set for continued growth. However, the global carbon market is now centred in London and is becoming a significant addition to the financial services sector.
	Global warming is, however, only one of several critical environmental problems that must be addressed in the near term if the world's growing populationparticularly the rural poor of the developing worldis not to suffer significant degradation of the ecosystems on which it depends. The other two Rio conventions recognised that, and the loss of biodiversity and freshwater resources has accelerated steeply since those conventions were promulgated. Their key weakness is the lack of mandatory provisions that create, in economic terms, scarcity of those vital resources. They therefore lack the means of price discovery that now characterises limits on greenhouse gas emissions.
	There have been experiments in creating markets for such ecosystem services in the US, such as wetlands banking; in Australia, where there have been desalination credits; and in Costa Rica in respect of biodiversity. However, all are essentially domestic in focus and impact. No international system of ecosystem payments currently exists. It is common ground that biodiversity and fresh water are increasingly scarce, but that no price mechanism exists for fully valuing them, with the result that they are wasted.
	I urge the Government to pioneer a system that encourages business in developed countries to invest where investment is most needed in the developing world. Such a system could be established relatively simply through the UK tax system. Tax credits are a well established mechanism for encouraging socially responsible investment. One key difference would be that the impact would be felt primarily outside the UK, in jurisdictions that met appropriate standards of governance and accountability for ecosystem investment. That would be consistent with many of the Government's environment and development policies, which are now primarily structured as aid programmes.
	Stimulating such investment from the private sector could not only leverage Government aid programmes but, if properly structured, stimulate a marketplace for environmental services investmentfor credits and offsetsthat would significantly increase the resources brought to bear on those problems. It would also bring in private sector and market disciplines.
	Given that ecosystem projects are long term and typically require significant up-front costs, it will be important that businesses be entitled to transfer excess credits that cannot be applied under annual limits to the use of the credits and to bank them against future tax liabilities. Those characteristics will provide confidence that the full value of the investment could be realised by the funding business and allow each business to use the credits as an integral part of its financial and tax planning.
	A market in such credits could then emerge to a limited extent. The goal, however, would be the stimulation of a market, comparable to the carbon market, in ecosystem service payments themselves. That would be done by requiring that to qualify for the tax credit, the investment would have to be structured to create fungible securities denominated in standardised terms and international currencies. Those new securities such as carbon credits could be registered and issued by participating countries that met standards specified in secondary legislationstandards for verification, monitoring and so on have been developing for some years both in national systems, such as that in Costa Rica, and across the voluntary sector. Augmented by standards of administration and transparency, the securities could provide sufficient integrity to underpin a new marketplace of considerable size and effect.

John Thurso: I have been following the hon. Gentleman's argument with great care and I agree with much of it. Is he aware that the blanket bog of Caithness and Sutherland represents one of the most important carbon sinks in the world? Will he assure me that any scheme of which he is thinking would not be prejudicial to our domestic banks of carbon and would not merely be for overseas?

Barry Gardiner: I welcome the hon. Gentleman's ingenuity in weaving his constituency so seamlessly into the debate. Of course, he is absolutely right: the carbon sequestered in peat bogs in this country alone is worth more than all that the forests of France and Germany have sequestered in wood. It is an absolutely essential resource, and the hon. Gentleman is right to make the point, even though he does so extremely shamelessly for the benefit of his own constituents.
	There is now a natural opportunity to extend the UK's leadership in carbon trading to trading in other environmental services while attracting new and larger-scale investments than voluntary efforts can afford and providing significant additional resources from the private sector to help to achieve goals that are being pursued almost exclusively through the public and not-for-profit sectors. The growth of the carbon market after mandatory requirements were imposed after years of very limited voluntary effort by business demonstrates the necessity and effectiveness of genuine financial incentives in underpinning market mechanisms. In the absence of international treaties with mandatory limits on the use of other ecosystem services, our tax system could provide an alternative basis for the development of market mechanisms comparable to those of the carbon market.
	I want briefly to touch on the raising of the duties on alcohol, which relates to a problem that has been widely trailed in the press in recent weeks. No raising of the duty will meet the taxation objectives that I have set out. It will mean that rich people can go on drinking as much alcohol as they like and poorer people may think a little bit more about whether to buy it. That in itself is not the issue. It would be much more powerful were we to introduce the sort of controls that were introduced in the pharmaceutical sector a few years ago when, because of the deaths of people consuming bottles of paracetamol, we said that there could be no two-for-one or BOGOFbuy one, get one freeoffers. That now needs to be imposed in the alcohol sector. We cannot expect big supermarket chains not to try to package alcohol at reduced prices. However, insisting that it can be sold only at a recommended retail price, as we have in the pharmaceutical sector, would be a far surer way of achieving the desired change in people's behaviour than simply increasing duty as a revenue-raising measure.

David Taylor: Research indicates that most people who suffer from the problem of alcohol abuse and binge drinking will have acquired their alcohol from the very low-cost supermarkets. The average urban or village pub cannot buy alcohol from its wholesalers for the prices that Tesco and others are selling it at. It will hit them hard, but Tesco will just carry on serenely, will it not?

Barry Gardiner: My hon. Friend repeats in another form exactly the point that I am making. The special offers and the undercutting of prices from the recommended retail price are enabling young people in particular to go out and get themselves drunk at little cost instead of simply buying alcohol to have a drink. We cannot effect the necessary change in behaviour merely by raising the duty on alcoholwe must tackle the source, which is the undercutting of prices.
	The 58 per cent. rise in schools spending that the Chancellor alluded to is well illustrated in my constituency, where as a result of that investment extraordinary improvements have gone on over the past decade, particularly in the secondary schools. I would single out Wembley high technology college, where the percentage of students achieving five A* to C grade GCSEs has improved from 42 per cent. to, in this last year, 83 per cent. That is precisely a result of the investment that has gone in, and it must continue to do so.
	I am conscious that other hon. Members wish to speak, and that I have spoken for a long time. I conclude by saying simply that the Chancellor's Budget was accused of being boring, but at least it was stable, sensible and prudent. By contrast, the Leader of the Opposition managed to speak for nine minutes and 28 seconds, by my reckoning, without putting forward a single Conservative policy. The Chancellor's fare today may have been no more exciting than a bowl of soup, but the Leader of the Opposition's soup was made of chicken, the chicken was starving and it was only the shadow of a chicken.

Stewart Hosie: I have no idea what the final remark of the hon. Member for Brent, North (Barry Gardiner) meant. I promise to speak for less time than he did, or at least it will appear to be less.
	This was a sub-prime Budget from a Chancellor who had no room to manoeuvre. Like his predecessor, he managed to boast about growth in the UK economythe usual boastsbut he did not seem to understand that OECD average growth outshone the UK for at least half of the 10 years up to 2007. He failed to mention, just as his predecessor normally did, that the small dynamic economiesIreland in particularhave had larger growth every single year since Labour came to power. He ignored, as his predecessor didI thought that his predecessor had written his speechthe quarterly downturns in the Scottish economy, and the many low and flat growth quarters on this Government's watch. As a result of the historical policies outlined today, economic growth in Scotland has been lower than the UK average every year since 2001. Scotland has had, on average, a growth rate 30 per cent. lower than the UK's for the past 25 years.
	The growth gap is not just measured in lost GDP opportunity, but in jobs, particularly manufacturing jobs. Since 1997, 1 million manufacturing jobs have been lost in the UK, with 100,000 in Scotland, 34,000 of which have been lost since 2002. As an example, 1,100 manufacturing jobs were lost in Dundee in the past year alone. Were the Government to do what is necessary to make Scotland more competitive, we could increase Scotland's GDP by an extra 19 billion over the next 10 years, and match the recent growth rate of the 15 small EU states.
	I said that the consequence of the Government's handling of the economy was not simply measured in lost GDP opportunity but in the loss of manufacturing jobs. The loss of those jobs is partly the cause of, and partly the result of, an 87 billion deficit in trade and goods, which the right hon. Member for Edinburgh, East (Dr. Strang) mentioned earlier. That deficit was 77 billion in 2006. There was a total balance of trade deficit of 70 billion, which was 55.2 billion in 2006. Those are extraordinary figures, but those deficits have a further impact: a direct, quantifiable suppression of GDP growth. The impact on GDP growth was valued at 4 billion, and there has been an impact on such growth every year since. UK GDP has grown by 30 billion less than it would have had trade been in balanceabout 1,000 per household.
	We saw in the Red Book today that receipts are down 1.2 billion from the pre-Budget report, but there was an increased tax yield from the North sea, which was based on an average price of $83.60 a barrel of oilan increase on the $68 a barrel estimate in the pre-Budget report. The average for the last quarter was $94 a barrel, and in four of the last five working days, we have seen record closing prices for North sea oil. I am pleased to see that the Red Book is forecasting 56 billion in revenues for the next six years, as opposed to the 38 billion in the last six-year forecast. I hope that the Government will not try to deny that this year.
	Nowhere in the Budget are there plans to invest the windfall in a trust or fund for future generations, such as that in Norway. Its oil fundits national pension fundis worth approximately 2,000 billion kroner. It is forecast to increase to about 2,800 billion kroner in a couple of yearsthat is equivalent to 250 billion, which is around 20 per cent. of UK GDP. Investing in such a fund is such a sensible idea that the Minister for Energy said
	the idea as in Norway of building up a national fund is actually quite...attractive.
	It is a pity that the proposal is not in the Budget. Even using some of the windfall from the high oil revenues to moderate the high price of fuel at the pump would help.
	Instead, we have fuel duty proposals that can be summarised as a deferral of the 2p rate just now, an increase of 1.84p a litre next year, followed by a p per litre increase above the index from 2010. That will ratchet up the percentage of the price at the pump in duty and VAT, of which the Government already receive more than 60 per cent. I hope that I can come back to that with amendments in Committee or on the Floor of the House as the Finance Bill progresses through the Commons.
	The key element lacking in the Budget is any incentive for growth. It contains next to nothing to give comfort to business. The economy is so tight, with the Government's borrowing rules destroyed if the off-balance-sheet PFI liabilities are included, let alone the way in which the Northern Rock unsecured liabilities might be calculated and reported, that the Government, far from taking the necessary steps to stimulate economic activity, competitiveness and growth, are scrabbling around for every penny from the taxpayer and from business to plug the holes in the books.
	The Red Book illustrates my point. Last year's pre-Budget report included an estimated net debt of 37.6 billion. Next year, the figure will be 43 billion. The pre-Budget report anticipated a cumulative deficit of 541 billion, and next year we face a deficit of 581 billion. Last June, the total of outstanding PFI liability was 179 billion on 53 billion-worth of capital projects; that figure has now reached 189 billion. Approximately two thirds of that is off balance sheet. Such debts are extraordinary.
	The Scottish National party Government in Scotland have removed or reduced business rates for 150,000 small companies. The UK Government should have followed suit for larger businesses and cut corporation tax significantly, allowing Scottish business to keep more of the 6 billion in corporation tax that the top 250 companies alone paid in the past financial year. The Government should, at the very least, have listened to the Scottish Chambers of Commerce and scrapped plans to raise the small companies rate, but of course they did not. Instead, they have taken their lead from the policy decisions of the previous Budget and the pre-Budget report, which the CBI estimates will take 5 billion out of business and straight into the black hole that is the UK economy.
	I have not added up all the numbers yet, but it looks as though the Budget will take more than 2 billion more from business in the next three years. That is cash. Given that borrowing is tight because of the credit crunch about which we have all heard, that cash could have delivered shareholder value or encouraged new investment. It might have allowed businesses to invest, acquire, recruit and grow. Businesses could have used the cash to market, upskill or retool, to absorb the swingeing increases in energy, transport and raw material costs or, indeed, to pay better wages. The workers are rightly saying, Look at real inflationwe need a bit of help here.
	Instead, the Chancellor has done another smash-and-grab raid, taking 2 billion extra from business and around 200 million from Scotland. I hope that the Financial Secretary will explain one specific point when she replies to the debateperhaps she can intervene now and tell me. The table on page 111 of the Red Book includes a heading, North sea oil and gas: abuse of management expenses rules. That is forecast to take 500 million in yield in the next three years. I would have thought that, if there was an abuse in one sector to the tune of 500 million over three years, the Chancellor might have mentioned it in the Budget statement. One would have thought that something of that magnitude was worthy of note. Or is it simply another way of getting cash out of the North sea after a previous promise not to touch the fiscal regime relating to it? Likewise, the Chancellor could have made a difference with proper investment in research and development, which is historically low, at about 1.8 per cent. in the UK and less than 1 per cent. in Scotland, compared with about 2.5 per cent. for our competitors.
	Those measures could have made a difference. Instead, the Government seem to be stuck on spin and obfuscation, building on what was said in last year's Budget, by estimating intangible investment, rather than counting what was actually spent. I refer hon. Members who are interested to paragraph B.71 on page 163, where they will find that that is exactly the approach that the Government are taking. They are no longer counting the investment spent; rather, they are estimating what it might have been, based on other parameters.
	The Budget speech was littered with references to social policy. Many of the social policies we agree with. Binge drinking and the violence that follows it were not referred to, but actions were taken in relation to the duty on alcohol that one might imagine would be designed to tackle the problem. It therefore seems quite extraordinary that the Government are putting 55p on a bottle of whisky, but only 3p on a litre of strong cider. Where was the attack on alcopops, which are designed to appeal to an immature palate? Where was the proper and fair taxation of cider, which is massively undertaxed, even up to 7.5 per cent.?

Mark Field: I very much agree with the hon. Gentleman about alcopops. He will know that my party brought forward a policy paper only last week on that. However, could he tell the House by how much duty on whisky has increased in the past 10 years? He will find that that particular alcoholic beverage has done fairly well.

Stewart Hosie: It has done extremely wellso well, in fact, that it is generating 2.5 billion in revenue, contributing massively to the UK economy. The key thing is not the revenue for the UK economy that whisky generates from sales here, however. If the market and the industry are to grow, how can the Scotch whisky industry go to foreign regimes and say, Stop taxing us unfairly and disproportionately, if those regimes can say to the whisky companies, Why should we, if your own Government is discriminating against you in their handling of the duty regime in the UK?

Russell Brown: I thank the hon. Gentleman for giving wayI have the press release from the Scotch whisky industry here. I am listening to him carefully, because he faces something of a dilemma. The Secretary for Finance in the Scottish Parliament has written to the Chancellor saying, Don't increase the duty on whisky, yet the Secretary for Justice in the Scottish Parliament, who has been on the road to Damascus, is demanding that the price of alcohol should increase significantly, to battle the antisocial behaviour caused by those who drink in excess.

Stewart Hosie: I suspect that the young men and women who binge drink and cause disturbances on our streets in the south and south-west of Scotland and in Dundeein fact, in every constituency in the countryare highly unlikely to do so after a few nips of 15-year-old Balvenie. We need to take on the real problemalcopops, super-strength lager that is cheaper than bottled water, and cider, which has been undertaxed for some timenot take on an industry that generates a huge amount for the UK economy in a way that will make its export drive much more difficult.

Russell Brown: I hope to make a contribution in this debate later, but let me say now that price is not the sole issue. The price of alcohol in some Scandinavian countries, such as Sweden and Finland, is way in excess of the price in this country, but those countries have significant problems with alcoholism. Alcohol is much cheaper in southern Europe, yet we do not see the same problems, so we are talking about more than a price issue.

Stewart Hosie: I agree entirely. Much of this involves cultural and educational issues. However, the evidence that I have seen from the UK Government and the Scottish Government suggests that price sensitivity is important in encouraging young people not to drink. Young people might have less money than grown-ups who like to have a glass of whisky. Pricing and price sensitivity are important for tackling these issues, but I believe that the Budget has tackled them in the wrong way. The Government have got it back to front by putting up the duty on a litre of cider by 3p and putting 55p on a bottle of whisky.
	The Government's inability to invest and to ensure competitiveness is not the only problem. The double whammy of Government policy and the upward pressure on inflation driven by the rise in energy and road fuel costsanother matter that the Government have ignored over many yearswill have a detrimental effect on consumers, who are paying higher prices for domestic energy, and for the distribution cost of all types of goods, which is passed on to them.
	Fuel costs are now so high thatfor contractual reasons in some casesthey cannot all be passed on from the hauliers to those purchasing the goods. The increasesand the spiking, in particularcannot all be passed on, and this is causing huge difficulties in the haulage industry. I speak to many hauliers in my constituency and elsewhere, and they tell me that they are struggling to make ends meet.

Sammy Wilson: This problem has been thrown into sharp relief in Northern Ireland because of the high levels of duty that are imposed by the Exchequer here in the United Kingdom, compared with the much lower rates imposed in the Irish Republic. That makes it very difficult for the haulage firms along the border between Northern Ireland and the Irish Republic to survive.

Stewart Hosie: A specific issue exists when a land border exists between one duty regime and another. The hon. Gentleman knows his constituency and the Province far better than I do, but I believe that he is making a valid point. It was no surprise, when I last pressed amendments on similar matters to a vote here, that they were supported by the Northern Irish parties, by Plaid Cymru and by my own party. They also received sympathyalthough no supporting votesfrom members of other parties whose constituencies were remote from the economic centres, and whose hauliers were probably telling them precisely what mine are telling me.
	Fuel price inflation now stands at 19.5 per cent., and food price inflation is now 6.5 per cent. According to the Alliance Trust, that has forced up real inflation for the over-75sand, indeed, the under-30sto 25 per cent. higher than the official published figures. Although we see average inflation figures for different groups in society, the marginal rates are always different. At a time of rising prices, I would have thought that the Government would do what they could for the very oldest and the very youngest.
	It is interesting to note the measures that the Government have announced today. I support their determination to lift children out of poverty. I know that the Scottish Government are actively involved in measures to do exactly the same thing. However, the UK Government announced today that child benefit for the first child would rise to 20 in two years. That might have had a slightly different gloss if they had announced a 70p rise for the first child and a 45p rise for subsequent children. Those figures would not have had quite the same hit as the 20 figure that the Chancellor announced earlier.
	The commitment to pensioners is for an increase of 2.5 per cent. or the rate of inflation, whichever is the highest. The basic pension rise will therefore be about 2.5 per cent., and there is to be an extra 50 on the winter fuel allowance. However, given the fact that the real rate of inflation for pensioners will outstrip the increase in their basic pension, I wonder how quickly the extra 1 a week will be eaten into, and just how many extra minutes the electric fire will be on before people realise that that bit of generosity is worth very little indeed.
	It is worth comparing this UK Budgetwith all the fiscal levers that the Chancellor has at his disposal with the actions being taken in Scotland, particularly in relation to business. We know that businesses are concerned about their cost base, and about rising prices for road fuel, energy and raw materials. We also know that they are struggling due to competitiveness and a shortage of skilled staff, and that they are worried about the tax burden and the complexity of the tax system, and the failure properly to invest in the transport network.

David Taylor: We have heard several times how complimentary the hon. Gentleman can be about the SNP Administration in Scotland. The east midlands of England has a population approaching 4.5 million, which is not dissimilar to that of Scotland, and a very similar social and economic profile to Scotland, yet the Barnett formula awards Scotland an extra 1,200 a head, which is 6 billion. If England and its regions had access to that sort of funding, we too could do things of the sort that the hon. Gentleman cites as improvements in Scotland.

Stewart Hosie: There are two points. First, because Scotland has been in surplus for the past 30 years, every single penny spent on public services in Scotland has been raised from taxes paid in Scotland. Secondly, if Scotland's funding was to be cut to the English average, it would provide England with 150 more per head but would cut a quarter of Scotland's expenditure. If Labour policy is now to sack a quarter of the doctors, a quarter of the teachers and a quarter of the nurses and to cut back a quarter of all expenditure, I will be delighted to make that argument on the doorsteps. Sometimes, the hyperbole about the Barnett formula takes Labour Members into areas where they perhaps might not want to go.

David Taylor: As someone with Scottish roots, I would hardly advocate that approach. As far as long-term financial strategy is concerned, we should be raising the regional support that is distributed to the east midlands, the south-west and so on to the levels of generosity and largesse that Joel Barnett inadvertently allocated to Scotland three and more decades ago.

Stewart Hosie: I am well aware of the regional imbalance in spending in England. I welcome the hon. Gentleman's demand for more money for his region, but because every penny spent in Scotland has been raised in Scotland, he should not expect Scotland to subsidise the east midlands.
	In the next three years, the Budget will take some 2 billion extra from business and about 200 million from business in Scotland, but notwithstanding the fact that he is taking the cash, the Chancellor has done nothing fundamental to address many of the concerns of businesses in Scotland and throughout the UK. He has failed to reverse the damaging impact of capital gains tax and has failed even to freeze the increase in the small companies corporation tax rate.
	We have heard a lot about CGT, but we have not heard in any detail what impact it will have. When businesses are trying to raise cash from a private investor or a business angelcall them what you willif that person expects the same cash return with the changes as they would have had with the taper relief in place, there will be far less money available, perhaps, for a proprietor-manager. They might say that it is not worth a jot. If they were only going to get the same cash but were going to have to pay the tax that they would not have paid under taper relief, the private investor might say, I'll put my money elsewhere. The tax will take 700 million in yield, according to the Government. I suspect that the damage to business through lost opportunity and lost investment will be significantly higher than that 700 million.

John Thurso: May I seek clarification? Is it the policy of the hon. Gentleman's party to maintain taper relief and that if it were in full government in Scotland the scheme that it would have would be the taper relief regime that is being abolished?

Stewart Hosie: We would not have done what the Government have done, because it is damaging to business. At the same time, as the hon. Gentleman knows, because of the way in which the regime was implemented the impact on second homesparticularly in rural areas, where there is a housing shortagemight be reversed and might be particularly bad. We would not have gone down that route.
	I have described the problems faced by businesses. I have described the actions that the Government have taken. I was contrasting and comparing what the Scottish Government have done in business terms with what the UK Government have done in the Budget and what they have not done. The Scottish Government have removed the cost burden for lots of small businesses with the removal of business rates for 150,000 small companies, but there was no comparable change to corporation tax through the UK for larger businesses.
	We in Scotland are addressing the skills issues by training 20,000 new teachers and setting a target of 50,000 national apprenticeshipsway beyond the targets set in England. We have removed complexity by properly focusing the business support network. We have taken a long-term view of how we match, first, the UK and then the growth rates of small companies through the appointment of the Council of Economic Advisers.
	After many, many years, we have finally understood and are fixing the congestion problems that cost Scottish business some 70 million a year, through the M74 completion project. We have even introduced an equivalent road tariff scheme to the Western Islesan issue that I recall campaigning on in 1983. We wanted this Government and our Government in Scotland to go much further in cutting corporation tax and really building competitiveness. After seeing the sub-prime Budget performance today, the sooner the Scottish Parliament has corporation tax powers, the better.

Stuart Bell: I am grateful for the opportunity to follow the hon. Member for Dundee, East (Stewart Hosie). It has been interesting to follow the debate from the beginning and see how many points have been made.
	The hon. Member for Dundee, East spoke about the trade deficit. He was very keen on that subject and raised a point similar to that made by my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) about the balance of payments deficit, as we used to call it. Let me explain one of the reasons why we have such a deficit. The last time I was in Scotland, in October last year, I bought a Christmas tree in Jedburgh. On the bottom of the tree it said Made in China. There is the essence of the trade deficit. We are into high-technology goods and the world sends us its low-technology goods, so we have a trade deficit. It is counterbalanced, of course, by a surplus on services across the exchanges.
	The hon. Member for Dundee, East said that there was no social policy in the Budget, but as the Chancellor made clear, the Budget is about a having a fair society, so that element is part and parcel of the Budget strategy. The hon. Gentleman also raised the question of a trust for revenues from the North sea. I have heard that story at least once a year for 30 years, and the Treasury has always made the point that the revenues coming from North sea oil go into Treasury funds and come out the other side by way of investments and all the rest of it.
	The hon. Gentleman also mentioned the Barnett formula, which was also mentioned by my hon. Friend the Member for North-West Leicestershire (David Taylor), who will be pleased to know that Lord Barnett was with us today. He was upstairs, if I may say sobut I am not allowed to say that, so I did not say it; I withdraw it. None the less, Lord Barnett did follow our proceedings very carefully today, and I am sure that he will have been touched to know that his Barnett formula is alive and well, and with us still.
	I congratulate the hon. Member for Dundee, East on his assimilation of the Red Book at such short notice. He also mentioned the private finance initiative. He will understand that it is now many years since the public sector could, on its own, handle the kind of investments that it needs. For example, when a hospital was built in my Middlesbrough constituency in 1997, it was the first PFI project. It was built with public and private money. That is the nature of the world we live in. I believe that about 59 billion is invested in our infrastructure through PFI, and there is no going back on that.

Sammy Wilson: While I do not think that any of us would question the use of PFI, the point that needs to be made is that when PFI schemes and the borrowing for Northern Rock are included, the levels of debt are actually much higher than are shown in the Red Book. Thatrather than an attack on PFI schemes generallyis the important point that is being made.

Stuart Bell: I understand the hon. Gentleman's point, but PFI schemes have always been off balance sheet. That was their great strength and benefitan element we took from the German economyand it was welcomed for many years. Now, all of a sudden, PFI schemes are not welcomecertainly not on the Opposition Benches, as Conservative Members like to throw at us the allegation that Northern Rock is a 100 billion off-balance-sheet contingency. If we look at it in the round, however, it is in the best interests of the nation. That is why we have PFI, and the type of public investment that gets me my Middlesbrough hospital.
	The hon. Member for Dundee, East also mentioned corporation tax rates. It seems a long time since I listened to the Chancellor, but I believe I heard him say that the major corporation tax rate was being reduced.

Stewart Hosie: The corporation tax reduction was announced last year, and it will come into force, but it was accompanied by the comparable loss of a number allowancesincluding industrial buildings allowances, which cover hotels and the tourism sectorfor which it did not compensate by any manner of means. There was a net take from business of around 5 billion. Yes, the headline corporation tax rate fell, but the small companies rate went, and the allowances were destroyed.

Stuart Bell: I shall deal with the subject of small companies in a moment.
	In his speech, the hon. Gentleman made a good point about inflation, which corresponded with a point made earlier by the right hon. Member for Fylde (Mr. Jack), who observed that it might be worth having a good look at the composition of inflation. The hon. Gentleman also mentioned business, and he has just mentioned it again in his intervention. The Chancellor spoke at some length about business, particularly small businesses. He spoke of opening competitive markets, and competitive corporation tax in a stable tax regime. The Government therefore fully understand what is involved in trying to help small and medium-sized enterprises. My right hon. Friend also said that he wanted to simplify their tax calculations and strengthen the concept of small firms' loan guarantees.

Mark Hoban: The rate of corporation tax for small companies is to rise by a penny this year and a penny next year. Is this not the wrong time to be imposing extra taxes on small companies?

Stuart Bell: That is an important point, which the hon. Gentleman may wish to make to the Financial Secretary when she sums up the debate. I was simply pointing out to the hon. Member for Dundee, East that the major corporation tax had been reduced in the Budget.
	I am sorry that my hon. Friend the Member for Brent, North (Barry Gardiner) has left the Chamber. He made an interesting, erudite speech, although it was on the long sidelonger than that of the Leader of the Opposition, to which he kindly referred. I am sure that many of the points he made will read very well in  Hansard, and will be taken up by people in various Departments, who will examine them and see what they can make of them. He made some interesting points about the non-doms and the Pandora's box that might be opened. Back in 1974, tax changes in the United States gave rise to the Eurobond market in London, and I think that one should be careful when making what may appear to be small adjustments that will in fact have major consequences. That was one of the points that my hon. Friend made.
	The right hon. Member for Hitchin and Harpenden (Mr. Lilley) has been present for most of the debate, and I am sorry that he is not here now. I shall not pursue the point about Chinese restaurantsI do not want any memories of China to feature in the debatebut he also spoke of Budgets past, and made a number of comparisons. He talked about Northern Rock, which is a fixation with the Conservatives. As my right hon. Friend the Member for West Dunbartonshire (John McFall) pointed out earlier, no guarantee has been called in, no investor has lost any money and no mortgage has been affected

Mark Field: Not yet.

Stuart Bell: And the business has been kept intact for the future. As for what the hon. Member for Cities of London and Westminster (Mr. Field) has just said from a sedentary position, it reinforces Labour Members' impression that the Conservatives would like the whole thing to crashthat they would like it all to go wrong. Of course, the impression that they wish to give may well not be the impression that they have themselves.
	The right hon. Member for Hitchin and Harpenden also made the interesting, and true, observation that a Parliament cannot bind its successors. The Chancellor was not trying to bind a successor Parliament; he was simply saying that Labour would win the next general election, and that we would therefore have control of all the measures involved.
	What the right hon. Gentleman had in common with my hon. Friend the Member for Brent, North was the fact that he spoke for at least half an hour. He produced an erudite exposition of how life was in the 1960s and 1970s. He seemed to think that there was a relationship between the wars in Iraq and Afghanistan and the war in Vietnam. I must say that I do not see that, and I thought his exposition on the so-called sub-prime mortgage and its contagious effect was somewhat erroneous as well.
	The right hon. Gentleman drew an analogy with being found to be without a swimming suit when the tide goes out. He might have given credit to Warren Buffett for that simile; it was not original. He also spoke of the gold reserves that the Chancellor sold some years ago, making much of the loss of value without taking account of the value of the investments that we made with the money from the sale. Were he to look at the return on the investments we made, he would see that the sale at that time was opportune.
	My hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) made a fine and important speech on manufacturing. In our country there is an overemphasis on the housing market and less emphasis on our manufacturing industry. My hon. Friend will remember that when we were in opposition we asked for a Cabinet Minister for Trade and we wanted the emphasis to be on the industrial side of our economy. The Government have gone to some lengths to do that, but we have seen the service sector increase as a percentage of our economy to the detriment of manufacturing. Therefore, when there is some dysfunction in the financial markets, it spreads out into the whole of the country. If we were still creating goods and selling them abroad, it would bring fine value to our economy.
	I am glad to see the hon. Member for Beckenham (Mrs. Lait) back in her place. She has followed the debate with great assiduity, if I may say so. She made some very important points and called the Budget, somewhat uncharitably, boring. I was not here at the time, but that reminded me of the Budgets of Benjamin Disraeli, who would have two little carafes in front of him with clear liquid in them. No one knew whether it was gin in one and water in the other, but as the debate proceeded, they found out pretty quickly. Gladstone spoke for three hours in his Budgets, whereas today the Chancellor spoke for only an hour. Winston Churchill, who was Chancellor for five years, used to have a carafe in front of him filled with part whisky, part water. Perhaps those earlier Budgets were less boring.
	The hon. Member for Beckenham made some important points about risk. If she reads the fine report of the Treasury Committee on all aspects of the credit crisis, she will find some fine definitions of risk. She said that we were on the cusp of a deep financial crisis, and referred to the financial difficulties of 1974. Those financial difficulties came about because of the decisions made by Anthony Barber on 17 December 1973. He destabilised our economy to such a point that the Prime Minister Ted Heath called an election for February, which he lost. He left the difficulties that he had created to a Labour Government to deal with.

Jacqui Lait: The hon. Gentleman's memory and mine clearly are at odds. My memory of what happened in 1974 is closer to the analysis made by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley). At that time I was trying to do some building works in a flat in Edinburgh, when the whole plaster allocation for Edinburgh was four tonnes for a year. At the same time, the whole of the wood supply for Scotland for a year went up in flames on a wharf in Glasgow. I would suggest to the hon. Gentleman that the 1974 collapse had considerably more to do with the shortage of commodities than with a Budget the previous year. The problem was far too deep.

Mr. Deputy Speaker: Order. In view of the dwindling amount of time, it might be better to come back up to date.

Stuart Bell: All I could understand from what the hon. Lady said was that apparently the roof fell in at that time.
	The right hon. Member for Fylde made some interesting points about inflation, and the high interest rates in this country. My answer is that if he wants lower interest rates we should join the euro; the interest rate for the eurozone is much lower. He talked about the cost of commodities in what is a global marketplace. That is one of the reasons why we are experiencing price inflation. The Leader of the Opposition said that it was running at 7 per cent. The price of wheat has gone up, and there is a shortage of wheat in the world.
	We are living in a world marketplacea global economyso that is affecting our country, and creating price inflation here. Commodity prices are going up. The prices of gas and oil are increasing. That is having an impact on inflation. That is why it is to the Chancellor's credit that he put low inflation, growth and stability at the centre of today's Budget. Instructing the Bank of England to keep inflation at 2 per cent.not 2.5 per cent.shows that the Government have a firm determination to keep inflation down, to keep our growth rate steady if possible, and to maintain stability in our economy.
	Interestingly, the right hon. Member for Fylde also mentioned Merrill Lynch. Because of the nature of the global marketplace, Merrill Lynch is being sued by Adelaide city council over bonds it sold to the council which included some sub-prime mortgage elements. He also mentioned BCCIthe Bank of Credit and Commerce Internationalbut I will not go down the historical road, as you have told me not to, Mr. Deputy Speaker. However, the fact is that all the current perturbations in the financial markets are being dealt with by a pool of banks, which did not exist back then.
	I accept that we have strayed somewhat from the subject of the Budget over the past three hours, and I intend now to return to some of its specific points. The former Chancellornow the Prime Ministerhas been criticised for his last Budget. All I remember about it is that he said that we would remove the 10 per cent. rate of income tax, which we will now do; instead of specifically targeting support on pensioners, families and low-income workers, we will move to a simpler two-rate system. Pensioners have been mentionedfor example, by the hon. Member for Dundee, East. We are raising the personal allowances for pensioners by 1,180, taking the allowance for anyone over 65 to about 9,810 by 2011, and with a further increase to 10,000 for anyone over 75. That seems to me a reasonable record for the former Chancellor to have had as he moved on to become Prime Minister.
	Early in the debate, much was said about our child poverty programmefor example, by my right hon. Friends the Members for West Dunbartonshire (John McFall) and for Oxford, East (Mr. Smith) and by the hon. Member for Dundee, East. The Budget will increase child benefit to 20 a week from April 2009. We will disregard child benefit in calculating income for housing and council tax benefit purposes from October 2009, and we will increase the child element of the child tax credit by 50 a year above indexation from April 2009. That is not a bad beginning for an attack on child poverty.
	The essence of the Budget is stability, growth and low inflation. I am glad that the hon. Member for Beckenham is present, because she talked about the current crisis. The financial turbulence is linked with rising commodity prices. She also mentioned the financial move of the pool of 10 billion being made available through the Bank of England and the $200 billion coming from the United States, and she wondered whether it was printed money. It is not printed money; it is a circulation of money. That is a difficult concept to explain, but it is not about money being printed.
	When the Bank of England got its act together on 12 Decemberwhen it allied itself with the Bank of Canada, the European Central Bank and the Swiss National Bank, and expanded the total amount of reserves offered at three-month maturity against a wider range of collateralit laid the foundations for maintaining stability in the financial markets. That stability is the cushion on which the rest of our economy will grow. Our growth rates will fall to about 1.25 per cent. but we will not fall into a recession. We will not talk ourselves into a recession, either. We will support the Budget with its emphasis on stability, low inflation and growth, and we will steer our way through the difficulties in the financial markets. That is why I congratulate the Chancellor on his Budget. I wish him wellas will the rest of the House, if it has any sense.

Several hon. Members: rose

Mr. Deputy Speaker: Order. The current average length of Back-Bench speeches is 22 to 23 minutes. We have until 7 o'clock. If all Members who are patiently waiting to speak today wish to achieve that ambition, from now on speeches should be a little shorter.

Graham Brady: I shall certainly be brief and seek to direct my remarks to the Budget, Mr. Deputy Speaker.
	I was not able to speak yesterday or in previous debates on the EU treaty, so I thought I would start with the Budget proposals on European expenditure. Such things often escape our attention when they should not. It is worth pointing out that in these straitened economic times and in a Budget where, as the Leader of the Opposition pointed out, the Chancellor has little room for manoeuvre, table C9 in the Red Book sets out clearly the steady increase in the net transfers of money from the British taxpayer to EC institutions. Such transfers will have risen from 4.7 billion in 2006-07 to 6.7 billion in 2010-11. The increases are even higher if one takes as one's figures the net contributions to the EC budget, which are given in a footnote to that table. All hon. Members have seen us give yet more powers to the European Unionor seek to do sothrough the Lisbon treaty, so it is important that we are aware of the consequences for our constituents, some of which are shown in the Red Book.
	This is the first day of these debates, and I am sure that my right hon. and hon. Friends will have an opportunity to examine the real substance of the Budget in much more detail. The Chancellor's statement gave almost nothing away. The Budgets of the previous Chancellor, who is now Prime Minister, were always a kind of snowstormfigures and statistics were showered over the Chamber leaving us all snow-blind and none the wiser. This Chancellor took a completely different approach, making his remarks for 53 minutes or so without providing any detail. It leaves us trawling through the books and statistics to find some indication of the facts and of the implications of economic policy
	Let us examine what the Government are doing in taxation; the current receipts are set out in table C6 of the Red Book. It appears that some pretty significant increases in taxation are being made: income tax gross of tax credits will increase over two years from 147.8 billion in 2006-07 to some 160.2 billion in 2008-09an 8 per cent. rise or thereabouts; VAT receipts will increase by 6.4 billion; capital gains tax receipts will increase by 1.2 billion; business rates will increase by 2.7 billion; and council tax receipts will increase by 2.7 billion.
	Total current receipts will rise over that two-year period from just under 520 billion to 575 billion, an increase of about 10 per cent. One could say that receipts will increase by roughly 5 per cent. each year. If one accepts the Government's projections of growth at about 2 per cent., and if we accept that inflation will be about 2 per cent., that leaves us with an increase of about 1 per cent. each year attributable to fiscal drag and the general increase in the tax burden. As people have more time to study these things they will perhaps arrive at a clearer and more detailed picture, but those basic facts about the Budget were simply avoided by the Chancellor. For that reason, we were given no real indication of the overall effect of the Budget.
	I want to touch briefly on one or two specific items in the Budget. I had a brief exchange earlier with the hon. Member for Brent, North (Barry Gardiner) about the air movement tax. As with other taxes, we have to ask ourselves what the purpose of it is and what benefit it is intended to achieve. The principal purpose is obviously to raise revenue, but in this instance the stated objective is also to achieve an environmental benefit. The basic logic is that there will be greater benefit if we incentivise airlines to fly their aircraft full, by charging for aircraft movement rather than individual passengers. However, I am concerned that there appears to be no recognition of the degree to which different types of aircraft generate different amounts of pollution. If we are honest about wanting to incentivise better environmental performance, we should try to reflect that consideration.
	Before the air movement tax is introduced, we also need to know what the Government propose to do to mitigate the potential effect on the air freight industry, about which I had an exchange at the latest Treasury questions with the Exchequer Secretary, who is in her place. She accepted the need to look into that and see what can be done. Air freight is a mobile and competitive industry, and there will be no environmental benefit at all if we simply divert air freight from UK airports to those in the near continent, from where it is transhipped by road to the UK.
	We must also consider carefully the impact of the new tax on the establishment of new routes from regional airports. Obviously, I am particularly concerned about routes from Manchester airport. The tax on aircraft movements could disincentivise the establishment of new routes, particularly long-haul routes, which would damage the regional economy.
	The hon. Member for Dundee, East (Stewart Hosie), mentioned road fuel duty. It is welcome that the increase has been deferred, but the purpose of the Government's policy is still not clear. There is a massive disparity between road fuel duty rates in the UK and in some other countries. The hon. Member for East Antrim (Sammy Wilson) mentioned concerns in Ulster about the position across the border, with the Republic of Ireland charging about half the rate of fuel duty that we charge in the UK, which creates significant problems.
	There are also serious problems for road hauliers in England. We see many foreign hauliers on our motorways, operating from all sorts of places around the EU, including Lithuania, where I think the duty is 16.5p a litre, compared with 50.9p in the UK. Again, we must ask what is being achieved by that huge disparity. Are we simply diverting investment and trade to our competitors in other EU countries, or are we achieving anything environmentally or for the UK? We must consider that carefully.
	There are to be changes to capital gains tax. Much as I welcome the principle of simplifying the tax, the Chancellor has mishandled the matter woefully in recent months. We need to see details of how the reliefs in the new tax regime will operate. It is unfortunate that the Financial Secretary is not in her place, because I wanted to establish whether I have achieved a minor victory on behalf of a constituent who sold his IT business before the pre-Budget report in exchange for a small shareholding of 1.5 per cent. in a much bigger company, but is locked in and prevented from disposing of it until after the start of the new tax year. I am sure that many people are in comparable positions, so it would be interesting to hear more about the transitional provisions that are referred to in paragraph 6 on page 118 of the Budget notes. I hope that, as is stated, the transitional relief will address such concerns by applying to
	circumstances where gains that have been deferred from disposals made on or before 5 April 2008 become chargeable after that date.
	I hope to hear confirmation from the Treasury that that is a response to the concerns that I raised.
	In this Budget, it is difficult to establish what the genuine big picture is. In his statement, the Chancellor used the words stability and stable 23 times, yet most of the indicators suggest that the last thing we have at the moment is genuine stability. We are faced with the global difficulties caused by the credit crunch, which have led to significant drops in business confidence across the country. Against that backdrop, the Chancellor wants us to accept not only that the problem is of course a global one, not caused by British Government policy, but that the appropriate response is to carry on more or less as we have been, with relatively little change and only a modest shift in the balance of tax and expenditure. As my right hon. Friend the Leader of the Opposition said, that is because the Chancellor's room for manoeuvre is absurdly limited. Spending, taxes and borrowing have been driven up to levels that are simply unsustainable.
	I want to ensure that there is plenty of time for others to speak [ Interruption. ] I have considerable support from my hon. Friend the Member for Ribble Valley (Mr. Evans) for that, if for nothing else. However, we have to ask what levers of policy are available. The Bank of England is now responsible for monetary policy, of course, but, as people well know, it is held in a vice: the Bank is trying to balance the need to provide some degree of stimulus for the economy against growing concerns about inflationary pressures.
	Normallyhistoricallywe would consider the effect and operation of fiscal policy, but the Government seem to have abandoned that as a lever of policy. The United States has responded with a massive fiscal stimulus to its economy. That may not be appropriate here, but what is really telling is that the Government do not have the freedom even to contemplate such an approach. If it is appropriate to create a little slack in the economy by reducing the fiscal burden, such measures are not found in the Budget, which seems to reflect a degree of tightening, and would require fairly dramatic shifts of policy.
	A degree of consensus is gathering on what the Government are now doing to restrain public expenditure growth quite firmly. They are trying over a period of years to regain the control and flexibility that they have abandoned. That objective is shared not only by the Conservatives, but increasingly by outside observers, including business organisations such as the Institute of Directors, which has been pressing for a more sustainable long-term approach in which public expenditure growth is much reduced. That is probably the responsible thing to do now. It is a pity that, as far as we can tell from the Budget announced today, we are instead to see an increase in taxation, and there is little prospect of significant change to that approach in the coming years.

Stephen Hesford: It is a pleasure to follow the hon. Member for Altrincham and Sale, West (Mr. Brady), who was my MP for about 18 months when we first entered the House. It was interesting to watch him work in the local patch.
	It seems a long time since the debate kicked off. The Budget generates considerable brouhaha; there is a circus-comes-to-town aspect to it. Many commentators make suggestions and projections, but time and again most of those who do not agree with the projections in the Budget report turn out to be wrong. That brings to mind the response that the right hon. Member for Witney (Mr. Cameron) made to the Budget. At one point, he misled the House to this extent: he said that the

Mr. Deputy Speaker: Order. No right hon. or hon. Member would do what the hon. Gentleman implies. I suggest that he withdraw that remark.

Stephen Hesford: Perhaps the right hon. Member for Witney misled the House unintentionally in this respect: he said that my right hon. Friend the Chancellor was the worst Chancellor in recent memory. I beg to disagree. The right hon. Member for Witney was special adviser to Norman Lamont; that is the embarrassment that he was trying to cover up with his smokescreen.
	The right hon. Gentleman made another criticism with which I strongly disagree, and it is one that Opposition Members have repeated. They say that in the past 10 years the Government have not fixed the roof while the sun shonethat is the phrase that they used. That is just a misconception about what has been going on. I will give one example showing why they are wrong about that.
	I remember when the third generation mobile phone licences were up for auction. The previous Chancellor raised about 30 billion from the sale. What did he do with most of that money? He paid off debt and reduced the public debt. That seems the perfect definition of fixing the roof while the sun shines, so the right hon. Member for Witney was absolutely wrong on that point. That action is one of the reasons why more public finances now go to the front line, rather than being spent on paying debt, which is what used to happen. Under the Conservative Administration, the public finances paid off failure.

Mark Field: The hon. Gentleman would be guilty of inadvertently misleading the House, too, if he did not point out that general Government net borrowing is now forecast to be 3.2 per cent. of gross domestic product for the year 2008-09, which exceeds the 3 per cent. Maastricht limit for the very first time. It is in that context that my right hon. Friend the Member for Witney (Mr. Cameron) made the case that while the sun was shining the roof was not fixed. We will all see the consequences of that in the years to come.

Stephen Hesford: I do not accept the hon. Gentleman's figure; I understand it to be 2.9 per cent. However, let us not quibble about the figures; let us take a look at where we are with debt. The debt position is low and stable. It is settling down below the 40 per cent. target rate, which is in line with the sustainable investment rule. It seems that we have a strong case on the debt position, contrary to what the right hon. Member for Witney said. Under the Conservative Administration, between 1992 and 1997, while the right hon. Gentleman was assistingif that is the right wordNorman Lamont, 1,000 businesses were going out of business every week. That position has been reversed.
	The right hon. Member for Hitchin and Harpenden (Mr. Lilley), partly prompted by my intervention, asked the following pertinent question: how can we be sure that the UK economy is in a position to withstand the buffeting of the so-called credit crunch? That is the point that I want to address. Professor Patrick Minford, a commentator not known as a supporter of the Government, stated last week in the financial press that whatever else one can say about the Government's handling of the British economy, they have produced the most stable, robust economy in living memory. That will determine whether we can weather the storms. It must be accepted by the House that we have a robust economy going forward. Yes, the growth forecast has had to be reduced, for reasons that are well known to the House, but the economy will certainly not go into recession, unlike the USA economy, which appears to be moving in that direction.
	What else did the Prime Minister, when he was Chancellor, lock into the economy that has been continued in today's Budget? The context for the Budget is a globalised economy. No one has a crystal ball, and the sub-prime problems from the United States could not have been foreseen, but over the past 10 years the Prime Minister tried to build an economy that could withstand the globalisation of manufacturing, financial services and so on, so that when there is a shift in global economic power from traditional areas such as Europe to India and China, our economy can compete on a level playing field.
	Another aspect that my right hon. Friend the Prime Minister locked into our economy was the absence of economic patriotism. We should not be little Englanders about the economy. My right hon. Friend the Chancellor made it clear today that there should always be an open market and free trade. I welcome that. Without an open market and free trade in the globalised economy, we would have the sort of spat that President Sarkozy has in France. He wants to introduce reforms into the job market and other aspects of the economy, but there is a debate in France about whether there should be economic patriotism and it causes him problems.
	All of us in the House have watched the Democrat primaries in the USA with interest. The two main contenders have got themselves into a mess by talking about the North American Free Trade Agreement between Canada, Mexico and the USA, and whether they can lessen or get rid of it and repatriate jobs to rust belt areas such as Ohio. One of the parties was allegedly saying one thing to one Government and another to the public. My right hon. Friend the Chancellor has made it absolutely clearand is right to do sothat we will not have such discussions.
	My right hon. Friend has also locked into our economy investment in industries that take us into the future. The science base has been supported by a number of Budgets over the years, and the Sainsbury review has been set up to examine and report on it. Capital investment in infrastructure has been one of the areas for which my right hon. Friend the Prime Minister set targets, which my right hon. Friend the Chancellor has continued today. I have seen how the west coast main line, which I use regularly, has improved over the past 10 years.

Stewart Jackson: That is due to privatisation.

Stephen Hesford: From a sedentary position, the hon. Gentleman mentioned privatisation. Does he want to intervene?

Stewart Jackson: indicated dissent.

Stephen Hesford: No, he does not.
	I have mentioned investment in infrastructure, but I also want to mention investment in the creative industriessupporting those industries, which will be an engine of economic advance. I should like to be slightly parochial about the issue for a second. There has been a cultural success in my area. Liverpool is the European capital of culture this year, and we can see the transformative effect of that in my sub-region in Merseyside. My right hon. Friend the Prime Minister has sought to make that writ large across the country.
	Education services are another issue in respect of the economy. A small example of that is attracting overseas students to our higher education base; that is a significant form of foreign investment in this country. My right hon. Friend has always said that we should invest in talent; that is locked into our approach to the economy and has been made clearer in today's Budget. Our target is to get 50 per cent. of the 18 to 30 age cohort into higher education, although there are divisions on that in the House, which saddens me. We need to equip our young people with a high degree of skill to compete in the global economy. At a different level, the Leitch review has discussed apprenticeships. The Government have made it clear that we are looking to bring in 250,000 more apprenticeships in the coming months and years.
	Investment in the environmental field and international development has been touched on today. I should like briefly to say something about the latter issue. Increasingly, India is an economic powerhouse. For many years, thanks to the Department for International Development, it has been our biggest partner in respect of overseas aid, and that is one of the reasons why for many years, the Indian economyparticularly in rural areashas had access to water, roads and education. In a reciprocal way, we have applied a good neighbour principle. When the urban Indian economy comes forward, we will be in a good position to set up trade with what will be a tiger economy.
	Finally, although we have a good and sound economy going forward, how can children and families look forward to the future in uncertain times? First, there is job growththere are 2 million more people in jobs than there were in 1997. There is record employment; more people are now in employment than ever before. That is another reason why we are in a good position to withstand the buffeting. All that contrasts with the 10 billion in cuts suggested by the Conservative party. If we are talking about bringing stability into the situation, we should realise that those cuts would destabilise the economy and put those children and families at risk.

Mark Field: That allegation of 10 billion in cuts is every bit as fatuous as that made by the hon. Member for Dundee, East (Stewart Hosie). He said that if there were a change in the Barnett formula, there would be cuts in schools, hospitals and policemen. He was shouted down by Labour Members. It is fatuous nonsense to suggest that there would be any cuts whatever.

Stephen Hesford: The hon. Gentleman has made his point, but I do not agree with it. I welcome the Budget.

John Thurso: The hon. Member for Brent, North (Barry Gardiner) drew me to my feet with his full and erudite exposition of the Ramsar convention. I should state to the House, for good order, my proprietary interest in the bog mentioned.  [ Interruption. ] I own it, yes. He also said that I was shameless in raising a constituency interest. I have no shame whatsoever in doing so, and I intend to raise four matters that have an impact on my constituents, as well as a brief point about the Budget as a whole.
	The Chancellor of the Exchequer came to his current job with a reputation as a safe pair of hands; time will tell whether they are safe enough to accept the hospital pass that he has received from his predecessor. The critical test of the Budget will relate to financial stability and whether our economy will survive. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) made some interesting points, many of which I agree with. For the second time this week, he told us about the tide and the bathing trunks. I could tell him from personal experience that if the bathing trunks are loose enough and the tide is strong enough, the tide can take the bathing trunks. He said that the way in which the banks have sought to package and sell unsecured debt is not a factor in the problems that we now face. I disagreeI think that their use of extreme financial technology has been a major factor in those problems.
	One of the key tools that will see us through is the independence of the Bank of England. I welcome the fact that, for the first time in its history, the Bank is independent at a time when the economy is being tested. Particularly in the light of the studies of lessons learned from the Federal Reserve and the European Central Bank, there is room to look again at whether the Bank should have the sole objective of curtailing inflation, as currently, or a mixed objective combining inflation and employment.
	The first of my four points of particular concern to my constituents relates to transport. I was glad that the Chancellor, with his particular knowledge of transport issues, brought that up in his Budget statement. I have no particular problem with the concept of using vehicle excise duty to encourage people into vehicles that are less polluting; in fact, I rather support it. Indeed, my colleagues and I tabled an amendment to that effect this time last year. However, I still have grave concerns about the cost of fuel to people who live in remote and rural areas. The hon. Member for Beckenham (Mrs. Lait) mentioned a fuel price in her area of 106p or thereabouts. I can take her to a petrol station in my part of the world where it is 126p and rising. That big premium is the main problem. The hon. Member for Brent, North made several points about the principles behind taxation, including the concept of fairness. In seeking to change behaviour, one of the key points about fairness is that there is somewhere for that behavioural change to go. If someone in the far north of Scotland has a car, that is the only way that they will get around. There is never going to be a bus service in the middle of Sutherland. We need a system that is fair. The long-term answer, which the Chancellor brought up in his statement, is road pricing. We should look to make progress on that policy, and I hope that he will. However, we need an interim measure to deal with that premium that exists in remote rural areas.
	My second point is one that was brought home to me forcefully by one of my constituents who is a pensioner. Typically, many pensioners have a modest occupational pension to supplement their state pension, and they own a house and a car, but they have a pretty fixed income. They have suffered from inflation in council tax, the price of fuel and other areas, but particularly fuel. My constituent said that when the winter fuel allowance began, it paid for an entire winter's supply of fuel for his house. Prior to today's announcement, it accounted for exactly half; his bills have precisely doubled in that time.
	I welcome the 50 and 100 increases to the payments; I note that they are one-off payments, and I hope that that policy will be revisited. But that will not go more than a quarter of the way to redress the balance of the impact on bills since the winter fuel payment was first brought in. We must consider further the issue of fuel poverty, to which a number of hon. Members have referred. The final point that my constituent made to me was that on top of everything, his 10p rate of tax has doubled. He is paying more tax, he has higher bills and he has nowhere to go. We must take account of people who have such problems.
	My third point is on renewable energy. I am an ardent and well-known supporter of all forms of energy that have a low-carbon life-cycle and can help to reduce our carbon emissions. One example is the renewable energy that can be supplied from the Pentland firthscientists who have studied it tell me that it could supply 31 GW. The core barrier is the transmission regime. If the Chancellor would really like to help, then on top of the renewables obligation certificates that are available, perhaps something could be done to make the grid more accessible for renewable energy produced in outlying areas. Having produced renewable energy, it would be helpful if we could get it to market.
	My fourth pointI cannot let the Budget go by without commenting on itconcerns, of course, whisky. Here I must declare an interest. Most of my interests are in the register, but one that is not is that I am about to become grand master of the Keepers of the Quaich, which is an organisation designed to celebrate and promote whisky. I have no problem with putting tax on alcohol as a method of raising money, and given the cracks in the Budget, I see why the Chancellor would need to raise money from that source, just as he raises it from vehicles, cigarettes or elsewhere. I have difficulty, however, with the concept of linking the need to raise money with social consequences.
	The social consequences of binge drinking are an extremely complex area. Some good organisations, such as Alcohol in Moderation, are working in this area, and I counsel all parties to be careful about pretending that a modest tax hike will have any great social benefit. Other methods could be used, and should be studied.

Jacqui Lait: While the hon. Gentleman is on the subject of the difficulties of increasing taxation, I wonder whether, given his interest in the whisky industry, he has been able to do a back-of-an-envelope calculation on what the impact will be on the smuggling of whisky, spirits and alcohol. That might undercut what the Chancellor is trying to achieve through the duty increase.

John Thurso: As I am trying my level best to give up the weed, I do not have a fag packet on me, so I have been unable to do any calculations, but the hon. Lady makes a valid point, which needs to be taken into account.
	I make one piece of special pleading on behalf of the industry. It has been remarkably successful at exporting overseasindeed, more than 75 per cent. of Scotch is sold overseas. Small distilleries are being brought back into production or newly created. I happen to know about one in Huntly. It would be a shame if that production was put in jeopardy by tax rises that had knock-on consequences in other jurisdictions.
	The Budget can be characterised as small areas of pain with large doses of Mogadon. We will have to wait and see whether it will do the job that we, as a nation, need to preserve financial stability, but I sincerely hope that it does.

Rob Marris: The Budget takes place in difficult circumstances, given what has gone on in the world. I shall not repeat what has been said and, unusually for me, but because of time constraints and many preceding lengthy speeches, I will take no interventions.
	We all know about the turbulence in the world economy, affecting banking, fuel, especially the price of oil, the price of foodfor example, the price of wheat has increased by 118 per cent. in the past yearand commodity prices, which have increased hugely, driven especially by demand from countries such as China and India. That is the difficult background to the Budget. The Chancellor has done a good job, in a steady-as-she-goes Budget, in trying to act positively in the face of the challenges of globalisation and economic turbulence in the world.
	The Budget was also announced against the backdrop of the Government's other policies to cope with the challenges of globalisation, such as the Leitch review of skills and the Sainsbury review of science to enable us to foster innovation here. The Government have also taken positive steps to protect intellectual property rights in this country, in the European Union under the treaty of Lisbon, and internationally. They have also increased spending on the NHS in recent years. A company such as General Motors is nearly bankrupt through the health payments that it has to make to its retired workers as well as its current work force because the USA does not have a national health system. Spending taxpayers' money on the NHS is, therefore, good for the economy. It is an investment, which helps business. Similarly, the Government have invested in education to increase skills.
	I did not notice any measures on research and development in the Budget, and I wonder whether the Government have conducted any research on the effect of the tax breaks that they have introduced in recent years on research and development. I did not notice any measures on manufacturing, which is especially concerning for me, as a west midlands Member of Parliament. My hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) spoke about that. I intervened on my right hon. Friend the Member for West Dunbartonshire (John McFall) about insider trading because I believe that the Government need to do much more about that, and make the FSA and the Serious Fraud Office get their act together.
	On a parochial matter, before I move on to some sniping, the headquarters of Marston's brewery, one of the major brewers in the country, is based in my constituency. The site of the third largest pub chain in the UK, run by Marston's, is also there. I am therefore disappointed about the differentials on alcohol duties in the Budget. I am especially disappointed that not only has beer duty increased by 4p a pint, but the duty on a litre of still cider has increased by only 3p. Still cider, bought cheaply from off-licences, causes problems with drunkenness in my constituency and, I suspect, many others. It is unfortunate that the Budget has increased the price of beer through excise duties much more than that of cider, which poses a greater problem.
	Let me consider the speech of the Liberal Democrat leader, the right hon. Member for Sheffield, Hallam (Mr. Clegg). What a vacuous response to the Budget. He presented almost no policies. He proposed a green tax con, which we have discussed previously in the House when considering green taxes that are revenue-neutral. The problem with green taxes is changing behaviour. If the behaviour changes, one cannot have a revenue-neutral tax unless one increases other taxes or ratchets up the green taxes. Neither of those options is desirable.
	The right hon. Member for Sheffield, Hallam also tried to steal the amendment that I, not the Liberal Democrats, was the first in the House to bring forward, to increase massively the vehicle excise duty on the most polluting cars. In case the 4x4 fraternity get on to me, I have repeatedly said in the House that nine of the top 10 most polluting vehicles sold in the United Kingdom are not 4x4s, but cars such as Bentleys, Maseratis and Lamborghinis. The first-time duty of 950 on the most polluting vehicles in the Budget is a step forward, but I wish that the Chancellor had gone much further, by doubling that rate and imposing an annual rate, which would change behaviour, because the second-hand value of those vehicles would plummet. That is where we will hit the market.
	The right hon. Gentleman seemed to have no understanding of non-dom taxation, which caused great hilarity in the House, and talked about poor non-doms. I am in favour of helping poor non-doms, through the Gangmasters (Licensing) Act 2004 and so on, but that is not the group that we mean when we talk about the taxation of non-domiciles. We are talking about the rich, not the poor non-doms, who will not make so much money that they will have to pay the 30,000 levy or whatever it is. The right hon. Gentleman completely misunderstood that.
	Things got worse with the Conservatives. It is like Groundhog Day with them. I have sat through seven Budget debates and the Conservative party is like a clock that has stopped: every 24 hours it is right twice. I concede the possibility that the Conservatives might be right this year, with the doom and gloom that we hear from them every year. However, they have not been right for the past 11 years, and the betting is that they will not be right this year. If the Conservatives are right, it will only be because the 12 hours have come round and, with their doom and gloom, the clock is briefly showing the right time again.
	As for the Conservative party's spending policies as an alternative to the Budget, the hon. Member for Cities of London and Westminster (Mr. Field) asked about the 10.5 billion spending spree. I can give him some figures on that: cutting the corporation tax rate to 27 per cent. will cost 1.75 billion; the transferable marriage tax allowance will cost 3.2 billion; the increase in the working tax credit will cost 3 billion; the increase in the inheritance tax threshold to 1 million will cost 2 billion; and raising the stamp duty threshold for first-time buyers will cost 400 million.
	On top of that, we have heard all kinds of wonderful commitments: more funding for the armed forces; more anti-MRSA funding; additional drugs for thousands of stroke patients; high-speed rail pilot schemes; billions of pounds more for the NHS, according to the shadow NHS spokesman, the hon. Member for South Cambridgeshire (Mr. Lansley); the national school leaver's programme that is so beloved of the right hon. Member for Witney (Mr. Cameron); his demand for a larger Army; and extensions to light rail. All those are worthy, but what did he say about raising taxes in his speech on the Budget? He talked about raising taxes on binge drinking.
	Raising taxes on binge drinking might be worth while, but if it works, it will be like green taxesit will be revenue-neutral, because people will drink less. That was the right hon. Gentleman's only tax-raising measure to pay for the long shopping list that I have read out, which will cost considerably more than 10 billion. Binge drinking taxes alone is not a good way to go. On sharing the proceeds of growth, the right hon. Gentleman talked about cutting capital gains tax, taxes on family businesses and corporation taxes, saving loads of post offices and every maternity hospital in the country, and more spending commitments. That is an even bigger black hole when all he is doing is putting up binge drinking taxes.
	So what is the right hon. Gentleman going to do? He is going to borrow loads of money. What is the form for that? The form is the previous Conservative Government, who doubled the national debt. They did not want to put up taxes, but they had to get the money from somewhere, because they did not have the guts to cut the programmesthank goodness for the working class in the United Kingdomso they borrowed the money and left us to take over, with a big financial hangover. Despite what the Conservatives say, the Government have paid off quite a lot of that debt. National debt is now far lower as a proportion of GDP than when we took over in 1997. The Conservatives are going nowhere.
	The other idea that the right hon. Gentleman put forward was that green taxes should go into a family fund. Again, that is the kind of revenue-neutral nonsense that we heard from the Liberal Democrats. The proposal will not work, because although it is very desirable if people or companies change their behaviour and stop acting in such a polluting way, the tax take will drop. If we had green taxes going into a family fund, as the right hon. Gentleman suggested, that would do nothing and be just another tax rise.
	Both Opposition parties have put forward vacuous policies, if policies at all, and wild, unfunded spending commitments. It will not do. At least the Chancellor has put forward a considered package in difficult economic times, which I think will work.

Nigel Evans: I should like to declare an interest, in that I am the owner of a small retail convenience store in Swansea, and something that I say in the 10 minutes to which I shall restrict myself might relate to that. In the spirit of the greenness that we all talk about these days, I am also thinking about doing a carbon offset on this speech. I shall read it tomorrow, and I shall offset anything that I feel has not added to the dayif the Chancellor will do the same. If he did that we would be quids in, because his was possibly one of the most boring Budget speeches that I have heard in my 16 years as a Member of Parliament. I was waiting for the big idea, and I still am. I know that we are not allowed refreshments in the Chamber, but there is an exception, in that the Chancellor is traditionally allowed a sip of whisky while he makes his Budget speech. If the right hon. Gentleman is still Chancellor at the time of the next Budget, perhaps everyone in the Chamber might be allowed a double espresso to keep them awake. His speech sounded to me much as the shipping forecast would sound to a lettuce picker in Mexico; it was that dire.
	I hope that over the course of this week's debates, Treasury Ministers will talk about the inflation rate. The 2 per cent. rate is mentioned time and again, and the Chancellor referred to it today. It is not an inflation rate that I recognise. That is not simply because of petrol prices or agricultural prices going through the roof. It is also to do with council tax, and the Government have even imposed an increase in prescription charges that is greater than 2 per cent. Everyone knows that the real inflation rate is much higher than 2 per cent. Stating that it is not might allow the Chancellor to ensure that public sector salary increasesand pension increasesare kept low, but we all know that it is much higher.
	We also heard a lot about things that will happen in 2010, 2012, 2015 or even 2020. Well, most of my matesalthough perhaps not all of themlive in 2008, and that is what we want the Budget to be about. We want to know what is happening now, not 20 or 30 years in the future.

David Evennett: My hon. Friend is making his usual robust and impressive contribution. Does he agree that this is a bad news Budget that will increase the tax bill for all the families in my constituency and across Britain? Other countries are cutting taxes, but this Government continue to increase them.

Nigel Evans: I agree with my hon. Friend; that is exactly what is happening. It has been estimated that the tax take for families will increase by about 110.
	We have learned enough from past Budgets to know that we need to read through all the details. I have here all the details that we are supposed to look through to find out exactly what is happening. For future Budgets, if we are going to be green, perhaps we could reduce the amount of garbage that we have to pick up from the Vote Office. We could put most of it on the internet. We need only the small section that shows us the increases and decreases; we could go to the net for all the other changes.
	My hon. Friend's point about tax increases is absolutely right. Tax freedom day is the day of the year on which we finally start earning money for ourselves, and it is now 1 June. Only after that date can we start to earn money for ourselves. We have to work for the Government from 1 January to 1 June. That period has increased by a whole week over the past four years. We now have to work a whole week longer for the Government instead of earning money for ourselves. Given the sensibilities and constraints within which a future Conservative Government will have to operatewe shall obviously have to clear up the mess left by this GovernmentI hope that when we can, we shall roll back tax freedom day so that people can earn more money for themselves and spend it on whatever they think is in the best interests of themselves and their families.
	The hon. Member for Wolverhampton, South-West (Rob Marris) mentioned brewing, and I shall do the same, as I am the vice-chairman of the all-party parliamentary group on beer. Some rubbish has been talked today. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) was absolutely right to say that the increases are being dressed up as measures to tackle binge drinking. When we see where they are targeted, we realise that they will not help to tackle binge drinking at all. There was no mention in the Budget of strong cider or of alcopops. The 4p increase on beer will not do anything to dissuade binge drinkers. I suspect that most of the problem is not caused by beer in any event. Other alcohols are at the root of the problem.
	In its representation to the Government before the budget, the British Beer and Pub Association said:
	The current closure rate
	of pubs
	is seven times faster than in 2006 and 14 times faster than in 2005.
	Last year, 1,409 pubs closed. The pub closure rate is now accelerating towards 30 a week. I am sure that we will all know of pubs in our constituenciesrural or urbanthat have closed with no chance of reopening. Pubs are part of the social fabric of our society, particularly in villages where there is only one pub. In one village in my constituency, the pub is closed and we are waiting to see whether it will reopen. There are real problems, and the increase announced today will only accelerate the pub closures in this country. That will mean not only job losses but damage to the fabric of society. Pubs are a place where people meet and talkthey are a great British tradition, for goodness' sakeand we do not want to lose them.
	Pubs are, of course, places where people drink communally. Part of the problem with binge drinking is that people can go into supermarkets, pick up cans of strong lager or whatever else and drink not in a licensed and supervised area but in the streets, at home or in other places. If the Government want to tackle the problem of binge drinking, they must do it in a far more targeted way than they have. This measure is everything to do with revenue raising, but it has been dressed up as an attack on binge drinking. The Government are wide of the mark, and will have to think again.

Russell Brown: Will the hon. Gentleman give way?

Nigel Evans: No, I shall not, because I have only four minutes left.
	I was with the chief executive of the Taxpayers Alliance, Matthew Elliot, last night. He is a tremendous guy who is doing an awful lot to expose how taxpayers' money is wasted. Part of the problem is that we have seen a huge increase in stealth taxes over the past 10 or 11 years, and this Budget will be no different.
	I want a future Governmenteven this Government, if they are brave enoughto ensure that on every product on which tax is paid, that tax is made visible and transparent so that people know when they buy a pint of beer that 73p of the price goes on taxation, or when they buy a litre of petrol that three quarters of the price is taxation. That would mean that people knew know exactly how much they were paying in stealth taxes. If people knew the level to which they pay taxes, they would think long and hard about how much money is raised from them and their families, and would take more care about how that money was spent.
	I have one more plea for a future Budget, which is about youngsters who go to school and have a badged uniform. Such uniforms are exempt from VAT only for sizes up to the age of 13. We know that another problem in this country is obesity and that some youngsters tend to be larger than others. Perhaps the Government could consider the problem of VAT charged to those who are large for their age, particularly as they have raised the school leaving age to 18. The VAT for those who go to institutions with badged uniforms should at least be reduced to 5 per cent. That would cost only 4 million. The Government love to make big announcements that do not cost much money; this is perfect for them, and would help many families throughout the UK afford to buy badged uniforms for the schools that their children go to without being ripped off by VAT.

David Kidney: Congratulations, Mr. Chancellor, I am pleased to tell you that you have passed your test and can now throw away the L-plates. It was a test taken in very difficult conditions, with storm clouds overhead, inconsiderate drivers ahead and traffic lights changing against the Chancellor all the way. To put it another way, this was a Budget drawn up in the very difficult international circumstances, following the collapse of the housing market in America, of a global credit crunch. We have recently heard that America is now probably in recession, so around the world people are downgrading their estimates for growth in their own countries, hoping that the old saying When America sneezes, the rest of the world catches a cold is no longer true. I hope so, too.
	This was always going to be a difficult Budget for the Chancellor to be able to use to say something of interest to us. With such limited room for manoeuvre, I was interested to see what his priorities for making change would be. I was pleased to hear at the beginning of his Budget speech that the values guiding his choice of priorities were fairness and opportunity. Those are my values and, I believe, the values of the Labour party. When I made my own Budget representations before today, with those values in mind, I kept my requests to two: would the Chancellor help pensioners in poverty, and children in poverty? I am pleased to see that those priorities emerged today.
	The increase in the winter fuel allowance for pensioners will help. I hear what people say about the fact that it was announced as a one-off payment, but if people want to join a campaign to get it incorporated into the winter fuel allowance for future years, I would be glad to be at the head of such a campaign, and to seek further increases in the future. This is a Labour Government, and although it is relatively late to do it, they are going to restore the link between increases in pensions and earnings. Again, if people want to join a campaign for that decision to be taken sooner rather than later, I would be pleased to head it.
	When people called, as I did, for something to be done to reduce the number of children in poverty, we did not quite have the same loud voices in support of our calls as the non-doms, in their corner, did. I am pleased that the Chancellor listened to us, however, and took a decision that will lead to still more children being drawn out of poverty. Back in 1997, we inherited a position where more than 3 million children were in poverty, but through the steps taken so far we have drawn 600,000 of them out of povertyand the steps announced today will reduce the number still further.
	The Chancellor was right to focus on helping parents who are in work. Recent research has shown that more than half the children still living in poverty have at least one parent who is in work. It is right to concentrate on raising the national minimum wage, which will happen again in October; it is right to raise the tax credit for children, as the Chancellor announced today; and it will be right next year to raise child benefit by much more than the rate of inflation. I was also pleased to hear that next year, for the first time ever, child benefit will be disregarded in certain circumstances when parents go back to work and claim housing benefit and council tax benefit. All the right decisions have been made there.
	I want to say a few words about green taxes. I think that  The Guardian said yesterday that this was set to be the greenest Labour Budget yet. I have to say that I think not. Nevertheless, I believe that the Chancellor was right to postpone this year's increase in fuel duty. If one of the reasons for putting that duty up is to try to change motorists' behaviour, encouraging them to use their vehicles less, I would have thought that massive increases in the world price of oil are doing exactly the same job for us. While the price is so high, I think the Chancellor is right to wait.
	The Chancellor briefly mentioned the climate change levy, which is going up only in line with inflation this year. The levy has, however, been a staggering success over the 10 years of the Labour Government. By 2010, something like 20 million tonnes of carbon dioxide will have been taken out of the atmosphere because of that levy, and about a third of it through voluntary agreements with intensive energy users. That is a great success. Following on from last year's announcement about having zero-carbon domestic properties by 2016, I hope that today's additional target for building zero- carbon non-domestic properties will make a real difference to future house and property building.
	We must not forget that, as the Chancellor reminded us today, the Government provide immense support for making existing homes more energy efficient, helping people to cut the cost of heating their homes. Warm Front and the predecessor of CERTthe carbon emissions reduction target, which used to be the energy efficiency commitmenthave already supported work done on more than 2 million homes. CERT alone is estimated as likely to be supporting work on nearly 3 million more homes over the next three years.
	The Chancellor reminded us of the historic step that will be taken next year, when alongside the economic Budget will be a carbon budget. For the first time, we will count the tonnes of carbon just as we count the pounds sterling in a Budget statement. The Chancellor also announced that in future we would auction 100 per cent. of the emissions trading scheme allowances for producers of electricity. That will bring in huge amounts of extra income, and I think we should establish the principle that it should be spent on environmental works for the future.
	My hon. Friends the Members for Wolverhampton, North-East (Mr. Purchase) and for Wolverhampton, South-West (Rob Marris) both mentioned manufacturing, which performed very strongly last year. Nearly 3 million people are employed in United Kingdom manufacturing, responsible for more than half our exports and accounting for three quarters of the spending on research and development. In its business trend survey, the Engineering Employers Federation describes what is happening in manufacturing as
	the best conditions for manufacturing in ten years with rising levels of output and new orders... expanding employment levels. Investment levels... the strongest since 1995.
	In its Budget representation, the EEF calls for measures to encourage enterprise and improve
	access of small and growing businesses to finance.
	Both those measures were included in the Chancellor's announcement today.
	I hope that in the year ahead we will build on the manufacturing successes of the last 10 years. As manufacturing takes its position centre stage, as house buying and selling slows and as consumer spending becomes more subdued, manufacturing has an opportunity to be at the forefront of our efforts. I think that the current world situation will ensure that it has that opportunity. I wish the Chancellor well in his future career as our Chancellor of the Exchequer, but I also wish UK manufacturing well in its position in the world from now on.

Mark Field: Essentially, this was a paralysis Budget. There was virtually nothing in the Chancellor's speech that had not already been announced several times over. It is clear that the Government are hoping that the ever-darkening economic clouds will pass soon, but that might be wishful thinking.
	I want to say a little about the tax on non-domiciles. The watering down of the Chancellor's earlier ill-advised non-dom tax proposal should be welcomed. Retrospective taxation, which seemed to be proposed last autumn, is invariably unjustified, and the intrusive demands for details of overseas earnings and the uncertainty heralded by the Government's draft legislation risked undermining the UK's international competitiveness. I find it somewhat disappointing, however, that the Treasury is now intent on pressing ahead even with this diluted legislation on non-doms. There should have been a proper, wide-ranging consultation to allow greater debate, with any recommendations to be implemented in April 2009 rather than in five weeks' time. The unintended consequences of the Sarbanes-Oxley legislation on New York's dominance of the financial sector demonstrate just how rapidly any city's competitive advantage can be lost through knee-jerk political interference.
	Nevertheless, I feel that having seen off the Treasury's set of politically rather than economically motivated proposals, we should return to the wider debate about the desirability of allowing internationally mobile, high-net-worth individuals to avoid making any contribution to domestic tax. Lest we forget, it was the Conservative party's suggestion on non-domsdesigned to fund our policy on inheritance taxthat raised the standard for this entire debate last October. The shadow Treasury plan at that juncture was simple and balanced: non-doms would be charged a flat rate of 25,000, and in return would be entitled to the certainty of not being required to declare their income either on or off shore.
	Five months on, the prospect of less clement economic weather, especially in the financial services sphere, has led many commentators to question the wisdom of imposing any tariff on non-doms. We should not forget that the great majority of those in the workplace who are non-domiciled are relatively modestly remunerateda point raised against a background of some hilarity by the hon. Member for Wolverhampton, South-West (Rob Marris). However, a flat rate charge for those people amounts to a substantial imposition on their overall earnings, but it is rarely of course from this quarter that any vocal complaint has been forthcoming.
	By contrast, in my role as the Member of Parliament for the Square Mile, I have been feverishly lobbied by leading financial services players, doing their best to convince me that anything beyond the status quo would result in a non-dom exodus of the job-creating super-rich from London to the cosmopolitan delights of Geneva or Frankfurt. I simply do not buy that. For a start, the attraction to high-net-worth non-doms and their families of living in London is probably worth paying an annual tariff of rather more than 25,000.
	It also seems to me a rather slippery slope that the cheerleaders for the non-dom community would have us go down. Once the argument is accepted that a sector and its participants are so important to this nation that they should be exempt from paying a share towards the communal income taxation pot, where do we stop? At this point it is worth stressing that even high-net-worth non-doms contribute extensively via council tax, VAT, other sales taxes and employment taxes on their array of staff. They make a substantial contribution to the Treasury and their status exempts them primarily from taxation on their overseas earnings.
	Strangely enough, the illogicality of the entire political class on this matter has gone largely without comment. If the levying of lowto the point of zerotaxes is so essential to job creation in the City, why is the case for lower, more internationally competitive tax rates for all not being made much more forcefully? The case for reducing taxation should apply across the economy, not just to a gilded few, whose special pleading can sound like disguised blackmail.
	The aggregate sums that stand to be raised by an annual charge along the lines currently proposed, working on the assumption that none is persuaded to return home, are negligible. Meanwhile no one disputes that we cannot, and should not, kill the financial services goose that lays such a golden egg for the UK as a whole. However, even as someone who represents the City of London, I think there is a worrying over-dependence on the sector for the nation's economic well-being that makes some action over non-doms desirable.
	As an inner-London MP, I have watched the influx of overseas money that has distorted house prices and the cost of middle-class living to the severe detriment of many indigenous Londoners. It is this group who feel that they are more than paying their way in collective taxation, yet at the same time are witnessing a marked diminution in the quality of their life. This unease is not a throwback to the politics of envy. Far from it; here is an aspirational, meritocratic group whose resentment is being stoked up by a perception of unfairness.
	The debate on non-doms follows hot on the heels of that on the preferential tax rates enjoyed by those working in private equity. It is essentially a middle-class revolt over the unequal rewards to labour in the globalised economy. To their surprise, many highly educated professionals working outside the gilded corridors of the financial services sphere see themselves losing out as the world becomes more integrated and interdependent. The perception that the benefits of globalisation are not being spread either equitably or fairly is fast taking hold among an articulate group in our society who in the past instinctively would have regarded themselves as winners in the lottery of life.
	The financial services sector is increasingly regarded by a sceptical and bemused general publicI do not necessarily agree with the sentiments, but they are the reality of what is happeningas a one-way bet to untold riches. Only last month, we learned that despite the effects of the credit crunch, overall City bonuses this year will top 7 billion. This is leading to enormous resentment not least from the middle classes, where the material expectations, particularly in London and the south-east, are becoming increasingly bleak. Indeed, the biggest concern I hear from middle-aged constituents is how, short of relying upon inheritance, their children can hope to match, let alone surpass, the standard of living they have taken for granted for decades gone by.
	The prospect of non-doms being seen publicly to pay their way will help assuage many of these concerns without careering towards fully fledged protectionism, which would be totally undesirable. The City might be wise to seek some accommodation with the Government on this issue. But the concern of young workers and their ability to match their parents' standard of living also touches on another serious concern of mine, which I have raised in the past, not least at the last Budget. The dividing lines of 20th-century societyat least in the post-war erawere largely defined by class, but I believe that the first half of this century stands to be shaped by the battle between generations. The debt trail of this Government means that the young people of today, as well as those yet to be born, will foot the bill for both the Government's private finance initiative-funded investments and the unfunded cost of pensions for older people. PFI might well have led to the construction of tremendous new hospitals in many constituencies throughout the country, but that will have to be paid for in the future; it is a case of jam today, and future generations of taxpayers will foot the bill. I worry that those future generations will have to lower their expectations significantly when the time comes for them to retire and benefit in the same way as previous generations from public pensions.
	Members on both sides of the House are being neither open nor transparent about this important issue. It is contained in the category of ongoing borrowing requirements. The hon. Member for Wolverhampton, South-West (Rob Marris) referred to Groundhog Day. We entered the House on the same day seven years ago, and public borrowing is another issue to which the term groundhog day could be applied. Every Budget I have seen has referred to borrowing going back into the black in about four yearsand that is the case today, too. There has always been the idea that we are just a few years away from nirvana when everything will have corrected itself. The trouble is, however, that we have an ever larger borrowing requirement going forward.
	We politicians are culpable in many respects. There are twice as many voters over 55 as there are under 35, and those voters are twice as likely to vote as younger voters. It is therefore perhaps unrealistic to expect anyone in the political arena to state certain bald facts on this matter. The reason many people well into pensionable age claim they receive so little from the state is that they have failed to pay anything like enough into the system to warrant their receiving what they now believe they are entitled to. Furthermore, the appetite in recent years has been for greater investment in public services, rather than tax cuts.
	In reality, too much of this much-vaunted investment in the public sector has not been wholly paid for by the Treasury's current revenue. The Government have in truth been using the mechanism of the private finance initiativenow the public-private partnershipas a form of disguised borrowing with repayment postponed for up to 30 years, removing from the public balance sheet some of the capital costs of Government projects. Admittedly, some 30 billion of the capital value of PFI projects has been included on the current balance sheet, but that leaves more than 120 billion of public sector debt currently unaccounted for. That calculation takes no account, of course, of Northern Rock, much of which is likely to remain under state control well into the next decade.
	I fear that this off-balance-sheet financing delays some of the tough decisions that need to be made about the future of public spending, and impedes the debate we must now have about how to manage public services not only in the years ahead, but for decades to come. One of the more depressing prospects in the years ahead is that my 40-something generation will be considered to have lived in the very best of times. We are all consuming what we believe we are entitled to, without much regard to the costs, and we run the risk of serious social unrest in the decades ahead as the evidence of this appalling generational pyramid sales scam becomes evident. It is not right that our young peopleand many unborn who will have the benefit of British citizenshipwill have to meet the liabilities for our short-sighted, selfish approach. I regret that we have not even begun to address some of these issues in today's safe-pair-of-hands, careful-as-it-goes Budget.
	I am grateful to have had the opportunity to say a few words, and I am glad that other Members who have waited a long time to make their contribution to this debate will also be able to do so.

Austin Mitchell: My right hon. Friend the Chancellor should be congratulated on a solid, sensible, workmanlike and utterly unexciting Budget, which was exactly what we wanted from him. We should warmly welcome what he has done for children and for education. Had I been Chancellorin a parallel, happy landI would have splashed out more as I am a generous Yorkshireman, not an ungenerous Scot. I would certainly have agreed with the points made by my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) on the tax on strong cider. That retails for about 1.70 a litre in GrimsbyI should know, because I drink a lot of itand threpence a bottle on that will make no difference at all.
	The highlight and most interesting part of the Budget was its reception by the Opposition parties. The Conservatives, who have demanded tax cuts and opposed youth training expenditure and much of the expenditure on education for years, suddenly started saying that we should have put aside a nest egg to face a difficult future. They started telling us that we should have built a roof, but they did not tell us exactly what kind of roof. The speech made from the Conservative Front Bench was frankly vacuous, rendered better only by the contrast with the speech made by the leader of the Liberal Democrats, which it was even worse.
	The Liberal Democrats have the advantage of retrospective infallibility. The essence of their argument was that what Labour had done was wrong, but what we have taken up from the Liberal Democrats was right and good. They have taken up and discarded a range of ideas in their lifetime, so we are bound eventually to stumble on something that they have advocated some years back. Thank heavens the right hon. Member for Sheffield, Hallam (Mr. Clegg) did not mention the euro and the benefits it would have brought us had we joined.
	The hallmark of the speeches by both Front-Bench spokesmen for the Opposition parties was that one can turn abuse into an economic strategy. That is the essence of what was being said. Interestingly, those who have done best out of our Labour Governmentthe wealthy, the City, finance and the richare now the most critical and most demanding of change from our Labour Government.
	I thought it was ill advised of my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform to sign the praisesthe Mandelson songof the virtues of wealth and high earnings, because I would certainly complain about obscene wealth. The demand made of wealth is that it fulfils its obligations to society, and it is not doing so on the necessary scale. The TUC booklet The Missing Billions tells us that 12.9 billion of personal tax and 11.8 billion of corporate tax is not paid to the Treasury because of avoidance schemes. As a result, the burden of taxation presses more heavily on the rest of society, in particular on the personal taxpayers and the lower range of taxpayers.
	Tax is now pressing too far down the scale in this country. It is ridiculous that people on the minimum wage are paying income taxthat is clearly wrong. We should make it one of our concerns to relieve the multitude who labour, as they used to be calledit is the multitude who struggle nowbecause income tax is pressing too heavily on them. That tax is coupled with the burden of increased food, fuel and utility prices and increased council tax, and those people need some relief from those burdens. We should either raise the limit at which tax comes in or double the personal allowances to give everybody some relief and some money to spend to boost demand.
	We could pay for that next year by increasing the taxation on wealthon earnings of more than 100,000to 50 per cent. We could splash out more money by doubling the winter fuel allowance. We need to put money into people's pockets to spend and thus boost demand, and we need to direct that money to the less well-off. Above all, we need a cut in interest rates. We have the highest interest rates in the world. Why? It is because we put finance in control of them. When we put the Bank of England in control, it meant that the interests of financehaving dear money and a high and stable exchange ratebecame dominant in our national policy. It would have been far more sensible to have had not just a single rubric for the Bank of England, to keep inflation to 2 per cent, but a second rubric, like the US Fed, to maximise employment too. The result is that I must praise what I call Bushnomicswhat they are doing in the United States, as opposed to what we are doing here. They have suffered from similar problems: the dollar is overvalued, although it is coming down, and they have a balance of payments deficit, as we do. Ours is slightly smaller, but it is now approaching 5 per cent. of GDP.
	In that situation, the markets will bring both the dollar and the pound down. The Americans are welcoming that with benign neglect and letting the dollar fall, as they did in the 1980s and again in the 1990s, with beneficial effects on the exporting sector of the American economy. We should do the same, but the Bank of England will feel obliged to keep interest rates highit is already saying thatto stop any slide in the pound. The pound has been the main instrument for defeating inflation, by making imports cheap and compelling manufacturing to discipline itself and cut costs to stay competitive, so the result of the high pound policy is that we have lost more than 1 million jobs in manufacturing. We live by manufacturing, but it is now a much smaller part of the economy.
	We may contrast that with the situation in Germany, where there have been far fewer labour-shedding cuts than here. German industry has reinvested, re-equipped and absorbed the skilled labour force from the east, and would have put itself in a very powerful position were it not shackled by the overvaluation of the euro. We need a powerful industrial base, and the Americans will get one as the dollar comes down because they have a much more powerful economy. Unfortunately, we have put all our eggs in the basket of finance.
	Finance has flourished under this Government, and indeed under the previous Government, but it cannot provide the jobs. What are we to live on when the oil contribution finally fades away? Finance is the dominant part of our economy now, and it is inherently risky. It takes risks for profit; hence the sub-prime crisis, the special purpose vehicles and the liquidity crisis. Those are the risks implicit in having finance as the dominant sector of the economy.
	The Labour party and the Labour Government need growth, because how can we improve the lot of the people except by increasing taxes, public spending and borrowing or by economic growth? Economic growth is the better, more straightforward way, but it is now threatened by contractionary tides both from outside and created in our economy. We are much exposed to those tides, which is why we needed a more expansionary Budget. It was disappointing in that respect. We need a touch of Keynes and a touch of Bushnomics.

Bob Spink: Will the hon. Gentleman give way?

Austin Mitchell: No, I am sorry; time is pressing.
	We need lower interest rates and a more competitive exchange rate. The high pound is still strangling manufacturing, and we cannot have a revival of production unless producing in this country is made profitable through a competitive exchange rate and an increase in demand. We need to build more houses, and to power through the contractionary forces that are rising in the economy. We cannot rely on the current policies, particularly the high interest rates and the Bank of England's uncompetitive exchange rate, to do that.

Russell Brown: I join colleagues in congratulating the Chancellor on what I hope is the first of many Budgets from him.
	Members on both sides of the House have said that these are difficult times for the global economy, but my right hon. Friend was able to report that the economy is stable and resilient and continues to grow. Importantly, he reported that the Government are meeting their strict fiscal rules for public finances. I appreciate that one of my colleagues from Scotland, my right hon. Friend the Member for West Dunbartonshire (John McFall), spoke earlier, but I shall give a quick flavour of the impact that today's Budget will have there.
	More than 750,000 pensioner households will benefit from the additional one-off payment of 100 to households including someone aged over 80 or from the additional payment of 50 to households including someone over the age of 60.

Bob Spink: I am grateful to the hon. Gentlemanperhaps I can call him my hon. Friend, given that all Members of this House are now my hon. Friend. Given that women pensioners are more likely to suffer poverty, and accepting what he said about how welcome the extra payments are, does he regret the fact that the Chancellor has not used the opportunity of this Budget to drive towards greater equality between women and men pensioners?

Russell Brown: The hon. Gentleman makes an interesting point. This Government have done much for women pensioners, but we recognise that there is still much more to do. Later in my speech I shall discuss one aspect of that subject which has disturbed me somewhat.
	More than 300,000 families will benefit from the increase in the child element of child tax credit by some 50 a year from April next year. I shall focus on one or two highlights of today's Budget statement that are important to a significant number of people in my local area, but first I come back to the point raised by the hon. Member for Castle Point (Bob Spink). If what I say is negative, it is something that I need to get out of my system. It arises not from something that was said today, but from what I see as a missed opportunity following last year's Budget statement.
	In that statement, the reduction in the basic rate of income tax from 22p to 20p and the abolition of the 10p rate, which come into effect next month, were announced. The news caused deep anxiety, and within days I and several colleagues met my right hon. Friend the then Chancellor, now the Prime Minister, to make him aware of our concerns. I have also discussed the matter with the present Chancellor a couple of times. Although 700,000 pensioners will be removed from the tax bracket next month, many people in areas such as the one that I represent, which regrettably has a low-wage economy, will not see a positive impact. In areas with a low-wage economy, we find households that struggle to get by. It is those low-income households, women pensioners under 65 and people who may have retired because of ill health who, unfortunately, will be paying extra tax after 1 April. The only reassurance I have is that any extra tax that we generate will go into public services, which, I believe, need continuing investment.
	I am delighted that the Chancellor chose to defer the introduction of a 2p increase in road fuel duty, especially with crude oil prices so volatile. I wrote to my right hon. Friend and discussed the matter with him, and I would like to think that he listened to me, but I suspect that he was listening to other representations as well. The decision will come as a great relief to households in my constituency, but we face a real challenge. Some people, we hear, are talking about the price of a barrel of oil reaching $200 in coming years. It has taken a long and painful time to reach $100 a barrel, but the fact that some people have in recent weeks been speaking freely of $200 a barrel is extremely difficult to swallow. As a nation, and perhaps globally, we have to think about how to face that challenge. Can we get people out of their cars?
	When crude oil prices are so volatile, the price differentials that have been mentioned in the Chamber this afternoon and on previous occasions are exploited. We see wide-ranging price differentials. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) mentioned the figure of 1.26 a litre. Parts of Scotland have extremes, but differentials have crept in even in areas where there are not extremes, and we desperately need to look into that.
	I fully support the green agenda, but individuals can be moved out of the comfort zone that the private car provides only if suitable public transport is available and affordable. In my area, the local bus network is nowhere near adequate, and it is more expensive than it should be. I wrote to Stagecoach, which is the main provider of public transport in my area, complaining about the increase in bus fares. I am disappointed that no Scottish National party Members are here, but I want to read to the House what was said to me. The letter says:
	I feel that it is important to highlight the fact that this year in particular bus operators in Scotland are subject to higher operating costs than our counterparts in England. This is a direct result of the current Scottish Governments decision not to award the increased level of Bus Service Operators Grant...we may find ourselves in the position that we may have to increase fares by a further amount later in the year.
	That is only one of a number of issues that have arisen of late. I know that colleagues paint the rosy picture that Scotland is a land flowing with milk and honey. It is an admirable country to live in, but there are some underhand practices taking place in Scotland under the current Administration in Holyrood.
	It has been raised, both on the Floor of the House and in Westminster Hall debates, that 34 million was allocated, as a direct result of the Barnett formula, to supporting disabled children and their families. That was a direct result of the pre-Budget statement made towards the end of last year. We cannot account for that money, and it is my belief and the belief of many of my colleagues that the money has gone towards filling a major black hole in the SNP Scottish Executive budget, which has led to the freezing of council tax. It is an admirable concept to freeze council tax, but should it be done at the expense of disabled children? Should it be done, potentially, at the expense of those in rural areas who desperately need public transport?
	The increase in alcohol duty has been mentioned. I intervened on the hon. Member for Dundee, East (Stewart Hosie) to make the point that his party was in a dilemma, as the SNP Cabinet Secretary for Finance and Sustainable Growth had pleaded with the Chancellor not to increase duty on whisky, whereas the Cabinet Secretary for Justice in Scotland had said that there should be significant increases in the price of alcohol to combat antisocial behaviour and binge drinking.
	The hon. Member for Ribble Valley (Mr. Evans) has left the Chamber, but I have heard it said more than once in the Chamber this afternoon that by increasing duty the Chancellor was tackling the issue of binge drinking and heavy drinking. The Chancellor's comments on the increase in duty came to some 135 words, but not once was binge drinking or heavy drinking mentioned. In fact, he summed up by saying: It is only because I have taken these decisions on alcohol and on closing tax loopholes that I am able to provide additional support for families and lift more children out of poverty. That, and no other reason, is why there is an increase in the duty on alcohol.
	As I suggested earlier, my view is that alcohol and its price is only one aspect of what we as a nation need to do to tackle the unsavoury behaviour that we see on many of our streets, in towns, cities and even villages, and on some housing estates. Let us be perfectly honest: if there is an increase in the price of alcohol, young people will manage to get their hands on additional money to buy it. We should never forget that sometimes they are not going out to buy it or getting others to buy it; they are taking it from home.
	There was a wry smile on the faces of some of my hon. Friends when the hon. Member for Caithness, Sutherland and Easter Ross declared that he would at some stage become the grand master of the Keepers of the Quaich. Let me assure the House that that is not some kind of secret organisation, as the title may suggest.
	All in all, it has been a good Budget under difficult circumstances. My hon. Friend the Member for Stafford (Mr. Kidney) made the point that the Chancellor passed his test today. I hope that this is the first of many Budgets that we will hear from him.
	Debate adjourned. [Liz Blackman.]
	 Debate to be resumed tomorrow.

PETITIONS

Post Office Closures (Swindon)

Anne Snelgrove: I present two petitions on behalf of my constituents, protesting against the closure of Westcott Place post office and Guildford Avenue post office. Both post offices are extremely well used. Westcott Place serves the central area of my constituency, which is a very poor area, and Guildford Avenue serves a mainly elderly population.
	 Following is the full text of the petitions:
	 [The Humble Petition of customers of Guildford Avenue Post Office,
	 Sheweth
	 That the Petitioners believe that the branch provides a vital service to the local community.
	 Wherefore your Petitioners pray that your Honourable House urges the Government to ensure that the Guildford Avenue Post Office is retained.
	 And your Petitioners, as in duty bound, will ever pray, c.] [P000146]
	 [The Humble Petition of customers of Westcott Place Post Office,
	 Sheweth
	 That the Petitioners believe that the branch provides a vital service to the local community
	 Wherefore your Petitioners pray that your Honourable House urges the Government to ensue that the Westcott Place Post Office is retained.
	 And your Petitioners, as in duty bound, will ever pray, c.]
	[P000147]

ACCIDENT AND EMERGENCY DEPARTMENTS

Motion made, and Question proposed, That this House do now adjourn. [Liz Blackman.]

Richard Taylor: I am grateful for the opportunity to initiate the debate, and I am revelling in the fact that I have three minutes extra, so I do not have to watch the clock. The Minister, whom I am pleased to see in his place, knows that on occasions, even though I sit on the Opposition Benches, I am trying to be helpful to the Government. This is one of those occasions.
	Everybody admits that some accident and emergency departments are struggling under enormous loads. Ambulances stacking outside have been drawn to our attention in several press reports, national and local, in the past few weeks. I want to try to find out why too many people are coming. Then we can tackle the issue and think of possible cures, as I believe that the problem is not intractable.
	I start with one example of completely inappropriate use of an accident and emergency department. I know of a lady over the age of 90, living alone, with end stage cancer. She could not cope, so she called her general practitioner. To his credit, he came. Some people have trouble getting their general practitioners to come out. However, he took the easy way out and did not solve the problem. Because she was going to see her specialist the next day, he took no decision and told her to see the specialist.
	The lady saw her oncologist, and to her great sadness and disappointment, he said, I'm very sorry. It is impossible to admit you, so she went home. She was desperate. The only thing she could do was call 999. She was taken to another hospital. She was not well enough to give a full history or details. As well as blocking up the accident and emergency department, she had further investigations and a scan, which she had already had. Sadly and inevitably, she died a few days later. Such situations are absolutely unacceptable, and there areor should beways of avoiding them. The name that I am using may be slightly out of date, but there are multi-agency response, or MARS, teams, which include nurses, therapists and social workers. They are specially designed to be called by a general practitioner or anybody concerned about elderly patients or patients with long-term illnesses in particular.
	 It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.
	 Motion made, and Question proposed, That this House do now adjourn. [Liz Blackman.]

David Taylor: MARS teams can be called out to solve the problems of the elderly and those with long-term illnesses, including cancer, so that they can avoid going to A and E departments and being admitted unnecessarily to hospital. Has the Minister any idea of the distribution of such teams and the publicity? The case that I mentioned did not happen in my area, but that GP obviously either had no access to such a team or did not know of its existence.
	I am making a call for the unification of the health service and closer co-operation between primary and secondary care. Such co-operation was made much more difficult by the purchaser-provider split, which drove a wedge between GPs and their hospital colleagues. Last night, I was at a meeting of the Royal College of Physicians with several MPs; it has just started a new initiative for the future of care closer to home which it calls Teams without Walls. I shall quote one or two extracts from the college's paper:
	General practitioners and consultants have traditionally worked together for the benefit of their patients. However in recent years this relationship has been more difficult with an organisational split between primary and secondary care. Now things are changing; new life is being given to the notion that they should work closely together once more.
	The college has brought together GPs, paediatricians and physicians to plan for those combined services. The paper goes on:
	We coined the phrase 'Teams without Walls'. New teams not bounded by institutions to provide high quality sensitive and accessible care across the primary secondary interface.
	There is good evidence to support this approach for long term conditions and the elderly in particular...This is not just about consultants providing sessions in the community, it is about new teams, with specialist nurses, therapists and pharmacists.
	It is all about working together to keep people away from A and E departments and hospitals when they do not need to go to them.
	A second way to reduce the load on A and E departments is through the effective use of emergency care networks. The network between the really major trauma centre and the ordinary district general hospital A and E department is well worked out. Ambulance workers, doctors and hospitals know that if someone has major burns, head injuries or chest injuries, they do not go to any run-of-the-mill A and E department, but to the local major trauma centre.
	However, not so well worked out and understood are the much more local networkson a county-wide basis, for example. A county may have one or two routine and ordinary accident and emergency departments and a number of minor injuries units or urgent care centres. The networks have to work effectively in those centres so that people know that for certain conditions they can go to a minor injury unit and for others they can go to an urgent care centre. Knowing that will keep them out of and away from A and E departments.
	The Minister knows that after a great struggle, there is in my patch a pilot trial involving having a doctor in our minor injuries unit. There is some good news from my constituency. A report to the acute trust board on 28 February said:
	The pilot has demonstrated that there is a modest but important clinical demand for a doctor-led
	urgent care service
	at Kidderminster Hospital...The pilot has demonstrated that such a service can be provided safely...The Trust should consult on establishing the UCS on a permanent basis.
	In the same paper, the trust recognises the importance of rotating staff between the A and E department, the urgent care centre and the minor injuries unit. That is absolutely vital in any network so that staff work in all the different departments and know each other. That means that the lesser unit will not be held in lower esteem because it will have the same staff. Moreover, if a patient going to the lesser unit needs to transfer to the major unit, the history taking and investigations are done only once in the lesser unit, sparing the scanning department and the X-ray department in the larger unit. That is absolutely contrary to my experience of years ago. I trained about half a mile from here at the old Westminster hospital, which sadly no longer exists. In those days, we used to get a lot of patients coming from out of London. We did not trust the work that had been done in perfectly reputable hospitals outside London, so we repeated all the investigations, which was entirely wrong. That would not happen in really close working networks with shared staff.
	The report to the trust board about the pilot in my area goes on to say that the trial has demonstrated only modest clinical demand. That is not surprising, because for various reasons the doctor has been put there from 9 to 5 on Mondays to Fridays only. That is when people do not much need the service, because with most sorts of moderate to mild emergencies they can go to their GP. It is vital that it is extended to seven days a week, perhaps from 9 am to 9 pm, to cover the out-of-hours periods that are most important to people. I am pressing for that and pointing out that a doctor on site in the minor injuries unit would ease the problems for the out-of-hours service, because if a doctor were there all the time, the few GPs on call might have to cope only with visits.
	That brings me to my third suggestion. It is very difficult to get people to the right place. No amount of telling will be recalled by patients or families in an emergency situation, who will just dial 999that may well be appropriate; if it is life-saving, it obviously isor take themselves to the nearest hospital regardless of what it is able to provide. I strongly believe that what is needed is a single phone number dedicated to patients and services within each network area of emergency care. The Minister will remember that in a Westminster Hall debate of mine some time ago, to which he responded, I listed the confusing variety of places and phone numbers that patients have the option of calling when they do not know what to do. They can phone NHS Direct or the out-of-hours service, or they can go to a minor injuries unit, a walk-in centre or an A and E departmentthe list is immense.
	I advocated, and still advocate, a single number to a triage system such as NHS pathways, which would advise and direct to the appropriate local service for that particular area and that particular patient. Trials of NHS pathways have been under way, and I hope that the Minister will be able to tell the House something about them, as they were due to report last autumn. A single number for specific direction to the appropriate unit would be ideal and would prevent people from going unnecessarily to the A and E department.
	My fourth suggestion is really a query. Delayed discharges keep beds occupied for the wrong reasons and make admissions to an A and E department more difficult. The Health Committee did a report on this matter during the 2001-02 Session. We went through the reasons and the cures, and the Government said in their response:
	by March 2002, the delayed discharge rate for patients over 75 had fallen further to 9.4 per cent. We believe that the further reductions in delayed transfers of care that we have seen over the period from October 2001 to March 2002 are sustainable and that the target in the NHS Plan to end widespread delayed discharges by 2004 will be achieved.
	My question for the Minister is whether that has actually been achieved. What is the situation for delayed discharges now?
	My fifth point, which was drawn to my attention by staff working in A and E departments, is the potential conflict between the 18-week target for elective admissions and the four-hour target for admission from A and E departments. One wonders whether some hospitals favour the 18-week target and use beds for elective patients, rather than attempt to maintain a reasonable bed occupancy rate so that there is slack for emergency admissions through A and E departments. Hospitals running with occupancy rates above 90 per cent. are likely to be in trouble. We come back to my main point that solving the problem involves limiting the number of people who turn up at A and E to those who really need to do so.
	Finally, I shall outline an extremely unacceptable use of an A and E department, which was just reported to me by a patient's family. It is so crazy and unbelievable that I have not waited for the trust's response to the family's complaint or my letter. An elderly lady was transferred from an acute ward to a less acute ward in the same hospitalprobably quite appropriately. In that ward, sadly, she deteriorated, and a doctor's opinion was sought. Her son-in-lawmy constituentwrote to tell me that because no doctor was available in the unit to deal with her condition, she was transferred by ambulance to the A and E department of the same hospital, where she spent much of the night on a trolley before being transferred to a bed in an acute ward the next morning.
	That is not just inappropriate use of A and E, but scandalous, inadequate care. No doctor was available to go to her, so in her frail state, at the age of 89, she had to go to A and E. That is totally unacceptable, and points to a basic failure of organisation and a failure to provide adequate numbers of medical staff on call. I hope that it is a unique example, but misuse of A and E departments is rife. I hope that I have given the Minister food for thought, and action, to improve the situation.

Ben Bradshaw: I congratulate the hon. Member for Wyre Forest (Dr. Taylor) on securing this debate, and I welcome the fact that he has taken up the two cases that he raised. I would like to be kept informed of the progress that he or his constituents make in pursuing those complaints; he said that he had made one about the second case he outlined, but it was not quite clear whether he had about the first. Even so, I would be interested to hear from him, because it sounds as if they are cases that have not been handled well, to say the least.
	Before I move on to some of the hon. Gentleman's key points, I would like to reflect on the huge national transformation we have seen in recent years in accident and emergency departments. In 2003, almost a quarter of patients waited for more than four hours in accident and emergency departments in England. In 2006-07, more than 98 per cent. of patients in England were seen, diagnosed and treated within four hours of their arrival. There has been a revolution in patient care. We should no longer allow patients to spend many hoursor even days, as some used to doin A and E. That transformation has been achieved thanks to the hard work and professionalism of thousands of front-line NHS staffnot only doctors, but nurses and the full range of NHS staff.
	In addition, our drive to eliminate long waits in A and E has made the whole health and social care system work together in new and better ways, resulting in faster access to treatment for patients. When patients are surveyed, they tell us that A and E is better than ever. In the latest independent Healthcare Commission survey, which was published in 2005, eight patients out of 10 said that they had had a good experience in A and E departments.
	However, as the hon. Gentleman rightly highlighted, A and E departments are busy. In 2006-07 there were some 18.9 million attendances at all types of A and E, and 3 million emergency admissions via major A and E departments. They are one of the few NHS services that have their doors open 24 hours a day, 365 days a year, dealing with a multitude of different conditions and issues. However, against that backdrop, A and E services continue to provide responsive, high-quality and timely care to patients. That is partly thanks to the increase in medical staff working in A and E. The last NHS work force census on 30 September 2006 shows that there were 4,714 medical staff working in A and E, including consultantsan increase of 61.8 per cent. since 1997. Health service spending by commissioners on A and E has increased by 125 per cent. since 1997, from almost 750 million in 1997-98 to nearly 1.7 billion in 2006-07.
	We recognise that there will be fluctuations in demand for A and E services. However, the NHS routinely plans for such changes and it is for services locally to decide what arrangements to put in place to deal with any changes in attendances to ensure that patients can regularly access high-quality, timely care. It is also worth noting that the rate of growth in attendances at A and E is now slowing. The annual growth rate in 2006-07 was less than 1 per cent.
	However, as the hon. Gentleman said, one of the key considerations is to view A and E activity in the context of other aspects of NHS patient contact and other services that deal with urgent and emergency needs. As he pointed out, people have several options if they need to access care: they can call an ambulance, or visit A and E, a minor injuries unit or a walk-in centre. They can also make a same-day appointment with their GP, or call NHS Direct or their local out-of-hours primary care service. Community services such as pharmacists, community mental health teams and community social services can also play a role.
	Those other services provide a lot of care. For example, although there were more than 18 million attendances at all types of A and E services during 2006-07, and more than 13 million were at type 1majorA and E departments, there are nearly 900,000 general practice consultations a day, equating to around 290 million GP practice-based appointments a year. Many of those services provide crucial care to patients to help them manage their condition without having to resort to urgent or emergency care later. Indeed, as the hon. Gentleman said, some people have a range of complex health and social care needs, and simple problems can cause their condition to deteriorate rapidly, putting them at risk of needing to attend A and E, and possible emergency hospital admission.
	Case management, which I believe is a modern way to describe the sort of multi-agency response teams that the hon. Gentleman mentioned, can provide improved preventive and tailored packages of care to people at risk of unnecessary attendance at A and E or admission to hospital. That is a fundamental element of the Government's overall strategy for improving care and outcomes for people, especially those with long-term conditions, along with the target to reduce emergency bed days by 5 per cent. by 2008, through better primary care and community settings.
	Case management, led by a community matron or a case manager, should provide intensive, ongoing, personalised care with a focus on prevention and integrated working between health and social care professionals. The community matron or case manager should take the lead in co-ordinating services, which are provided as far as possible in the community setting, supporting people to live in their own homes and communities. For the service to be most effective, the community matron must integrate with other parts of the health and social care system by working alongside GPs and others in the primary health care team, as well as the local acute trust, mental health care providers and social services.
	NHS and social care organisations have already made a major impact, by reducing emergency bed days in 2006-07 by 10.1 per cent. over the baseline year of 2003-04, meaning that the reduction target has been significantly exceeded. Continued efforts and reform are crucial to maintain those improvements in care in all parts of the country and to sustain bed day reductions in future.
	One of the Government's commitments is that by this year we expect all PCTs and local authorities to establish joint health and social care networks and teams to support those with long-term conditions who have the most complex needs. We will issue guidance later this spring to embed integrated working and standardise it across the country. Integrated team working will benefit a range of individuals, not just those with long-term conditions, and there are a range of other services and teams across the NHS and social care that provide valuable support.
	I recently visited a good model of that kind of care, at the Calne health centre in Wiltshirea rural county, like the hon. Gentleman'swhere I met the neighbourhood nursing team. It was providing an excellent service, so patients did not have to make long unnecessary journeys to hospital, and emergency admissions were not delayed. Instead, patients received excellent care from those teams of nurses in their own homes.
	We need to ensure that all parts of the urgent and emergency care system provide the most timely and appropriate care for patients, and that there is integrated provision that makes sense to patients. As the hon. Gentleman said, we also need to ensure that wherever patients access care, they get a robust and consistent assessment of the urgency of their need. As the hon. Gentleman reminded us, he has shown interest in the work under way to pilot a potential assessment tool, NHS pathways. We hope to have the outcome of that evaluation in the first half of this yearnot, to correct him, last autumn.
	Although much has been done, the NHS Next Stage review will ensure that things are driven even further forward. As hon. Members will know, last year the Prime Minister invited Lord Darzi to conduct a review of the next stages in the development of the NHS. At the local level, each strategic health authority has set up working groups of local clinicians and other NHS staff to develop their vision of world-class services in their area. That will include a vision for acute services and for a number of other pathways that can have an impact on A and E, such as long-term conditions. Those visions will be developed with clinicians, based on their own experience and combined with the best clinical evidence available.
	It is also clear that local health commissioners and providers need to continue working together to ensure that patients can navigate their way through the system of urgent and emergency care services. It is important for people both to have straightforward information, clearly communicated, about what to do in an urgent or emergency situation, and to be aware of the options available.
	In connection with that, we want to simplify access to urgent care services. We are, as the hon. Gentleman requested, exploring the possibility of introducing a three-digit number to sit alongside the emergency services number, 999. That number would need to be memorable for the public. Users would need to be confident that they would get a rapid and safe assessment of their needs and an appropriate response to meet them. As stated in my noble Friend Lord Darzi's interim report, the Department has been pressing ahead with preliminary feasibility discussions with Ofcom, the telecoms regulator. A number of technical issues concerning the provision of a three-digit number still need to be addressed. Ofcom will also need to consult formally on any proposals to introduce such a number, but we are making good progress in our discussions with Ofcom, and I feel confident that that can be achieved.
	In conclusion, I am sure that the hon. Gentleman will join me in congratulating the staff who work in A and E departments up and down the country to ensure that patients are seen and treated in a timely way, on their hard work and continued dedication, and in welcoming the huge contribution that a range of other services and staff make in supporting people to live at home and be cared for in the community. I very much regret the examples that he raised this evening, and I would be grateful if he could keep me informed on the progress of his complaints. I share with him a wish to see an integrated and seamless service that does not let people down, and which patients want. That is the service that we are determined to provide for them.
	 Question put and agreed to.
	 Adjourned accordingly at twenty-four minutes past Seven o'clock.